New Zealand Budget 2025: How It Affects Tertiary Education in New Zealand

The Government's 2025 Budget includes an extensive investment plan reshaping New Zealand’s tertiary education system. A total of $398 million has been allocated for the sector over the next four years. This funding will primarily focus on increasing enrolments, providing tuition support for key subjects, and restructuring vocational education management.

Addressing Rising Demand for Education

The demand for tertiary education places is on the rise. To meet this need, the Government plans to allocate $111.4 million. This funding aims to facilitate institutions in accepting nearly all forecasted enrolments for 2025 and 2026.

Furthermore, the plan includes additional places for 175 full-time Youth Guarantee learners each year. These positions cater to young individuals seeking alternative training options outside conventional classroom paths.

Subsidies Are Getting a Boost

Significant changes in training and tuition subsidies will take effect from 1 January 2026. The adjustments include:

• A 3% increase for targeted subjects across Levels 1 to 10 on the NZ Qualifications and Credentials Framework (NZQCF).

• A 1.75% increase for priority areas at Levels 7 to 10, which encompass degrees and higher education.

  
  

The primary goal of this increase is to ensure that educational providers maintain consistent quality while managing cost pressures.

Targeted Subjects for Subsidies

To understand better what these subsidy boosts mean, here’s a detailed breakdown of the funding:

| Funding Area | Amount |

|-----------------------------------------------------------|---------------------|

| 3% subsidy boost (Levels 1–10) | $212.5 million |

| 1.75% subsidy boost (Levels 7–10) | $64.4 million |

| Support for enrolment growth (2025–2026) | $111.4 million |

| Support for Student Loan Scheme (fee cap up to 6%) | Not specified |

| WDC support before shutdown | $15 million |

| ISB long-term funding | $30 million/year |

| ISB transition support | $10 million (2025/26)|

| Transitional VET support (2026–2027) | $10 million/year |

Fee Increases May Be Coming Too

Educational providers will also have the option to raise fees by up to 6% in 2026. To assist with this potential increase, the Student Loan Scheme will adjust accordingly. A public consultation is anticipated soon, making this change still subject to finalization.

This proposal follows a temporary 4% subsidy boost that is set to end in 2025. Rather than continuing that arrangement, this budget introduces more targeted, long-term support for educational providers.

Vocational System Undergoes a Full Shift

Significantly, the current Workforce Development Councils (WDCs) will be dissolved at the end of 2025. In their place, a new structure known as Industry Skills Boards (ISBs) will be established starting January 2026. These ISBs will manage training standards and support skills development across various industries.

To ensure a smooth transition, the Budget allocates:

• $15 million for WDCs to continue operations until their closure.

• $30 million annually for the new ISBs starting in 2026.

• $10 million as a one-time payment for transition expenses in the 2025/26 period.

  
  

Additionally, $10 million per year will be made available during 2026 and 2027 to support essential courses at certain polytechnic and institute levels, which are crucial to the job market.

What Students Should Expect

For those considering future study plans, particularly students, this budget signifies important changes:

• More course places should become available, particularly in trades and health sectors.

• Fields such as science, mathematics, medical training, and teaching degrees may experience enhanced resources.

• Fees could see a slight rise in 2026; however, student loans are set to adjust to accommodate these changes.

• A new entity will manage vocational learning, providing specialized support.

  
  

These shifts aim to concentrate on job-ready fields and ensure students receive necessary support throughout their educational journey without sacrificing access or quality.

Why It’s Happening

The rationale behind these changes is to effectively shape the workforce in critical areas. This includes sectors like healthcare, education, rural industries, and essential infrastructure. As these fields require more trained professionals, Budget 2025 seeks to address the growing demand by providing support to students and educational institutions tailored to these areas.

Overall, this method prioritizes funding towards sectors experiencing significant growth, ensuring a well-trained workforce for the future.