Tertiary Education Minister Penny Simmonds has announced Budget 2024’s focus on establishing a sustainable tertiary education sector. The minister emphasized the need to support and incentivize hardworking learners, businesses, and tertiary education providers.
Simmonds criticized the previous year’s Fees Free policy as an “expensive failure” that didn’t achieve its goal of increasing tertiary education enrollment or participation rates. She noted a decrease in full-time equivalents in tertiary education from 2017 to 2023.
In response, the government plans to shift the Fees Free scheme from the first year to the last year of study. This change aims to motivate students to complete their studies successfully and aligns with the coalition agreement with New Zealand First.
Starting in January 2025, eligibility for the scheme will follow similar criteria to the previous scheme, encompassing provider-based and work-based learners at Level 3 and above on the NZQA framework.
Simmonds highlighted the importance of maximizing the value of education funding, mentioning estimated savings of $877 million with the revised Fees Free policy, while also improving education outcomes.
Budget 2024 includes $65 million over four years for the Apprenticeship Boost scheme, supporting apprentices to earn while training. Employers of second-year apprentices will continue receiving monthly payments of $500 until December 31, 2024. From January 1, 2025, first-year apprentices in key industries will also be eligible for the $500 per month subsidy.
Additionally, the budget allocates $266 million in additional operating funding over four years to increase tuition and training subsidies for tertiary education and training providers by 2.5%. Universities are expected to receive around $136 million in additional funding over this period.
To address cost pressures and maintain course quality, Budget 2024 proposes an Annual Maximum Fee Movement rate of 6% for 2025, subject to consultation later in the year.
Furthermore, interest rates for overseas-based student loan debtors will increase by 1% for five years, starting from April 1, 2025, along with an increase in late payment interest for borrowers, both overseas and in New Zealand.
Simmonds described these initiatives as a sensible approach to tertiary education funding, emphasizing their support for students, apprentices, employers, and tertiary providers while ensuring accountability to taxpayers.