Tertiary Education
The Minister of Finance delivered Budget 24, today.
Vote Tertiary Education
As part of Budget 24 Minister Simmonds has announced changes relating to:
- Fees Free
- Apprenticeship Boost
- Tertiary funding
- Overseas student loan interest rates.
You can find details of these changes below.
Rewarding hard work in tertiary education and training – Beehive.govt.nz(external link)
Statement of Tertiary initiatives [DOCX, 446 KB]
Statement of Tertiary initiatives [PDF, 276 KB]
Fees Free changes
The Government has announced that Fees Free for the first year of study and training will finish at the end of 2024 and will be replaced with a final-year Fees Free scheme starting from January 2025.
The new final-year Fees Free scheme will be implemented from 1 January 2025 with the following parameters:
- Learners entering their final year of study or training from 1 January 2025 and who have not received first-year Fees Free may be eligible for the new final-year Fees Free scheme.
- Eligibility will be based on settings for the first-year Fees Free scheme and includes provider and work-based study or training at level 3 and above on the New Zealand Qualifications and Credentials Framework.
- Repayment will be made following the learner completing their qualification with refunds starting from 2026.
We are currently working through the transition arrangements for first-year Fees Free learners as well as detailed policy design and implementation for the final-year Fees Free scheme.
Once these decisions have been made, we will publish information on the Fees Free website.
Apprenticeship Boost
About Apprenticeship Boost
Apprenticeship Boost provides subsidies to employers of eligible apprentices to incentivise employers take on new apprentices to help build the skilled workforces key New Zealand industries need.
Changes to Apprenticeship Boost
Budget 24 provides Apprenticeship Boost with ongoing funding. The revised initiative will provide monthly payments of $500 (exclusive of GST) to employers of first-year apprentices working in key industries.
Employers who currently receive funding for second-year apprentices will continue to receive monthly payments of $500 until 31 December 2024. As of 1 January 2025, only first-year apprentices in targeted industry areas will be eligible for the $500 per month subsidy.
By prioritising first-year apprentices enrolled in qualifications for target occupations, Apprenticeship Boost supports the Government’s focus on apprenticeships and investment into key industries.
Apprenticeship Boost will fund first-year apprentices working in key industries
Targeting Apprenticeship Boost funding will help to address skills shortages and improve the long-term success and sustainability for key industries and the economy. Key occupations for targeting will be communicated at a later date.
To ensure that targeting Apprenticeship Boost by industry remains relevant, the Ministry of Education will review Apprenticeship Boost every 2 years with a report back to Cabinet Ministers. The first review is scheduled for 2027.
Apprenticeship Boost will no longer provide payments to employers of second-year apprentices as of 1 January 2025.
For more information about Apprenticeship Boost, go to the Ministry of Social Development’s Work and Income website.
Work and Income(external link)
Tertiary funding
Changes to Tertiary funding rates
Budget 2024 provides a total of $266 million of operating funding over the next 4 years to increase the tuition and training subsidies paid to tertiary education and training providers by 2.5%, in line with forecast inflation for 2025.
Universities are estimated to receive approximately $136 million in additional funding over 4 years. Actual amounts will depend on the Tertiary Education Commission’s investment decisions and providers’ enrolments.
Changes to the maximum increase to fees providers can charge (Annual Maximum Fee Movement (AMFM))
The Minister for Tertiary Education and Skills will consult on a proposed AMFM rate of 6% for 2025 later in 2024, through a notice published in the New Zealand Gazette. This change will help providers manage cost pressures and maintain the quality of their delivery. The changed rate would apply to the 2025 calendar year.
The proposed maximum rate is higher than forecast inflation for 2025 (2.5%) due to AMFM increases since 2020 being significantly below inflation. If providers raise fees by the proposed maximum 6%, fees in 2025 will still be lower in real terms than they were in 2020.
Individual tertiary education and training providers can decide on the fees they charge within the limits and conditions specified by the Minister of Tertiary Education and Skills. Individual tertiary education and training providers can decide on the fees they charge within the limits and conditions specified by the Minister of Tertiary Education and Skills. Some may choose to increase their fees for 2025, which could be the 6% limit or a lower rate, or they may not increase at all. Each individual education provider will have more information on their fees later in 2024.
Information for tertiary education providers can be found on the TEC website.
Tertiary Education Commission(external link)
About the Annual Maximum Fee Movement (AMFM)
The Minister for Tertiary Education and Skills has authority to set the annual maximum increase to fees tertiary education providers can charge enrolled domestic learners for provider-based courses that lead to the award of a qualification at level 3 or above on the New Zealand Qualifications and Credentials Framework. Any proposed conditions must be publicly consulted on by way of a notice in the New Zealand Gazette, as stipulated by the Education and Training Act 2020.
Overseas student loan interest rate change
Over the last 3 years inflation has overtaken the interest rate paid by overseas-based student loan debtors by 9.6%. Budget 24 increases the interest rate charged to student loan borrowers who are based overseas by 1% for 5 years taking effect from 1 April 2025. The new rate is forecast to be 4.9%. The Government intends to introduce legislation to make this change.
The 1% increase will also increase the late payment interest for overseas and New Zealand-based borrowers.
Inland Revenue | Te Tari Taake(external link)
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