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Most people could be forgiven that school leavers opting to complete an apprenticeship, rather than go to University, can avoid getting into debt. The common thought is that if you are earning while working then apprentices can remain debt free - but it appears life's not that simple. While apprentices are earning money, they are often working close to the minimum wage due to their age and experience. But for some youngsters there are plenty of outgoings directly related to their training.
Michael (not his real name), says he made the right decision to get an apprenticeship as an electrician two years ago.
"Going to university wouldn't be right for me," says Michael. "I like to work with my hands, to be out and about solving problems and not sitting at a desk for a lifetime. I couldn't do an office job."
Landing his apprenticeship was a golden opportunity, he says. But to be able to get to work he had to get a car, then there was a raft of expensive industrial quality tools he has had to buy, with a few still on the list, plus around $1000 a year tertiary fees. He attends block release at college, weekly evening classes and plenty of home assignments. Plus of course a full-time job.
"I really thought I'd be working debt free," he says. "But I am now paying my parents back money for tertiary fees. My employer has a scheme where I pay them so much a week for the tools I have bought. I'm finding it hard to pay my parents back though. But once I qualify I get all my tertiary fees back from my employer."
Michael says his debt level as a direct result of his apprenticeship is close to $2000 and there's still two years of the apprenticeship left.
"But I'm one of the lucky ones because my parents can afford to help me," he says. "And my employer is teaching me well. I've no complaints."
But there may be help at hand for the lucky few because 'Michael' and his fellow apprentices can apply for interest-free student loans - just like their former school mates who have gone to university.
A spokesman for finance minister Dr Cullen says industry trainees, including Modern Apprentices, have the same eligibility for student loans as other tertiary students.
"Although, given that they are earning while they are undertaking their training, they can't receive the living costs component of the student loan," says Cullen's spokesman.
Unfortunately, being eligible for a free student loan is not that straightforward. A government department called StudyLink administers the student loan scheme. It doesn't recognise all apprenticeship courses - tertiary institutions that apprentices attend have to be on StudyLink's list of preferred providers and the number of days a year the apprentice attends block release is also part of the equation.
Jeremy Baker, executive director of the Industry Training Federation - the national body for 40 industry training organisations, says there is quite a bit of variability as to whether employers charge their apprentices for training.
"If there is a charge for training is involved it would be worth investigating whether or not it is appropriate for the government to provide loans for that," he says. "Where there is a significant charge it is interesting that [some] apprentices are not eligible for the student loan system."
Baker says some employers do pay all the training costs for their apprentices, while others may not. "One of the questions that employers want to start thinking about is what are they going to do to attract good quality trainees. They should consider what they are going to pay [apprentices] and what they expect their apprentices to pay [for training]."
It seems that while there is government help for some apprentices to obtain student loans for tertiary fees, school leavers need to choose their courses and employers carefully. But it's not all bad news. Smart apprentices who qualify should still have a much smaller debt than those leaving university and they'll have the benefit of work experience. Something money cannot buy.
For more information phone StudyLink on 0800-88-99-00.
Modern Apprenticeships
Tertiary Education Minister Dr Michael Cullen recently presented a certificate to the 3000th person to complete their modern apprentice training.
The Labour government launched Modern Apprenticeships in 2000, aimed at those aged between 16-21.More than 9000 people are currently in Modern Apprentice training, with about 2000 of them in Auckland. Around half are involved in building, construction and engineering.
In the last budget $34.4m was allocated over four years to expand Modern Apprenticeships to 14,000 by December next year.
