One student said she spent the money on a couple of nights out, and Taylor Swift tickets.

Booze, flights and nights with strippers are some of the things students say they are spending their Studylink loans on.



The course-related cost loan is a $1000 lump sum payment available to those studying full time. It can be applied for annually and is added to the applicant's student loan debt.



Last year nearly $120.3 million in course-related costs was paid into students' bank accounts.



Studylink, a Ministry of Social Development division which administers the loans, says they are given to help buy materials or services for study, and warns students expenditure can be audited.



However, students say it is common knowledge the money can be spent on anything they like, with no risk of being audited.

None of the students spoken to wished to be named.

A man who finished studying in 2011 said he spent his $1000 on alcohol and strippers.

FAIRFAX "It's a tough enough life being a student, having that money there is a nice back up", said one student.

"I managed to blow $900 in nightclubs within three nights … I also spent the other $100 on strippers."

A student from Victoria University said his course-related costs paid for two overseas holidays.

"My girlfriend and I went to Fiji. Another year I went to Seattle to watch a video game tournament. Another time I got a new computer - it was a gaming PC," he said.

A Massey University student said her loan had funded a number of nights in town as well as tickets to see pop star Taylor Swift.

Because the loan is paid into personal bank accounts it often means students can not distinguish loan money from personal cash, she said.

"It's a tough enough life being a student, having that money there is a nice back up. Not only is it for studying, but for life in general," she said.

A number of students said they spent their loans on study-related items such as books, tools and stationery. One student said it was "vital" to receive the loan in order to make ends meet.

In response to an Official Information Act request, the Social Development Ministry said serious misspending could be referred to the police for prosecution.

"Borrowers sign a contract with the Government for the loan and are advised that a false statement or claim is a breach of that contract and can result in restriction on future access to the loan scheme."

It was unable to provide any examples of audits taken on student loan expenditure because they were unrecorded, it says.

New Zealand Union of Students' Associations' president Rory McCourt said the anecdotes of a few should not be used to generalise about all students.

"What the Ministry of Social Development's audit of the scheme shows us is that New Zealanders can have confidence that students are using this yearly $1000 loan to pay for the basics, there is no fraud here," he said.

"The evidence, the auditing and the experience shows that course-related costs loans go on essentials - not luxuries."

McCourt added that the loan limit had not risen since 1993, while "the cost of transport, fixing your car, software and textbooks has."

"The reality is that more and more students are struggling and this miserly loan is being used to cover costs student allowances once paid for. In fact, it's so bad that 28 per cent of students now have credit card debt before they graduate –that's up from 18 per cent just four years ago."

Taxpayers' Union spokesman Ben Craven said it was concerning the ministry was unable to provide any details of audits taking place.

It was well-known some students spent the money on anything but study-related expenses, he said.

The Government's policy of restricting students' access to a loan after seven years of fulltime study was causing medical students' to struggle, while others were able to use Studylink money as a "slush fund", he said.

"At a time when we have the best and brightest medical students unable to receive support for their last years of study, it seems ridiculous that we hand out interest-free cash payments to undergraduates so they can spend up large on a few nights on the town."

Victoria University Student Association president Rick Zwaan said not all students were misspending the much-needed loan.

It had not increased to match the rising cost to study, making it hard for students to make ends meet, he said.

"For the vast majority of the students the $1000 is pittance for the true course-related costs. For most students the costs of text books, essential equipment and materials is far more than $1000," he said.

In 2013 Audit New Zealand reviewed the integrity of the student loan and student allowance payments system. According to MSD no issues were identified.

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