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

The Government's 2025 Budget includes a new investment plan that brings changes to New Zealand’s tertiary education system. A total of $398 million has been set aside for the sector over four years. This funding focuses on enrolment increases, tuition support in key subjects, and changes to how vocational education will be managed.

The demand for tertiary places is rising. The Government plans to respond to that with $111.4 million. This funding is aimed at helping institutions accept nearly all of the forecasted enrolments for 2025 and 2026.

Also included is room for another 175 full-time Youth Guarantee learners each year. These places are meant for young people who want training options outside the usual classroom paths.

Subsidies Are Getting a Boost

From 1 January 2026, training and tuition subsidies will go up in several fields. 

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

• A 1.75% increase will go to priority areas at Levels 7 to 10, which includes degrees and above

The aim is to help providers stay consistent in quality while covering cost pressure.

See below for which areas are covered:

Fee Increases May Be Coming Too

Providers will also get the option to raise fees by up to 6% in 2026. To support that, the Student Loan Scheme will adjust to help cover the difference. A public consultation is expected soon, so this change isn’t final yet.

This is a follow-up to a temporary 4% subsidy boost that ends in 2025. Instead of continuing that, this budget creates more targeted long-term support.

Vocational System Undergoes a Full Shift

The current Workforce Development Councils (WDCs) will shut down at the end of 2025. A new group, called Industry Skills Boards (ISBs), will step in from January 2026. These boards will manage training standards and support skill-building across different industries.

To handle the switch, the Budget includes:

• $15 million for WDCs to keep running until their final day

• $30 million each year for the new ISBs starting 2026

• $10 million (one-time) for transition costs in 2025/26

Alongside this, $10 million per year will be available during 2026 and 2027 to support certain polytechnic and institute courses seen as vital to the job market.

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

What People Should Expect

If you’re a student looking at future study plans, here’s what this budget means:

• More course places could be available, especially in trades and health

• Science, maths, medical, and teaching degrees may see improved resources

• Fees might rise slightly in 2026, though loans would adjust to cover it

• Vocational learning will be managed by a different group with dedicated support

These changes focus on job-ready fields and helping students through their study path without losing access or quality.

Why It’s Happening

Behind these moves is a goal to shape the workforce in key areas. That includes hospitals, schools, rural industries, and core infrastructure. These fields need more trained people, and Budget 2025 is trying to meet that by backing students and providers in those spaces.

Instead of spreading money across every area, this approach channels it toward where demand is building.