Hon Penny Simmonds
Minister for Tertiary Education and Skills
Budget 2024 sets the path for a sustainable tertiary education sector that supports and incentivises hard working
learners, businesses, and tertiary education providers, Tertiary Education Minister, Penny Simmonds says.
“The first year Fees Free policy was an expensive failure and did not deliver its aim of more students going into
tertiary education, nor did it increase participation rates. In fact, there were fewer full-time equivalents in tertiary
education in 2023 than there were in 2017.
“So we’re changing the Fees Free scheme from the first year to the last year of study, which is a much better way to
incentivise students to complete their studies.
“We’re rewarding hard work and success and delivering on our coalition agreement commitment with New Zealand First,”
Penny Simmonds says.
Eligibility for the scheme will start from January 2025 and be based on similar settings to the previous scheme. It will
include provider-based and work-based learners studying at Level 3 and above on the NZQA framework.
“Every education dollar must be applied to its maximum value. Our Fees Free change to a more effective policy will also
produce savings of $877 million while helping to deliver better education outcomes,” Penny Simmonds says.
“Budget 2024 also supports apprentices to keep earning while training towards their qualifications, with $65 million of
funding over four years for the Apprenticeship Boost scheme.
“Employers who receive funding for second-year apprentices will continue to receive monthly payments of $500 up to 31
December 2024. From 1 January 2025, first-year apprentices in key industries will be eligible for the $500 per month
subsidy.”
Budget 2024 provides a total of $266 million of additional operating funding over the next four years to increase the
tuition and training subsidies paid to tertiary education and training providers by 2.5 per cent.
Universities are estimated to receive approximately $136 million in additional funding over four years. Actual amounts
will depend on the Tertiary Education Commission’s investment decisions and providers' actual delivery volumes.
“To further help providers manage cost pressures and maintain the quality of their delivery, Budget 2024 proposes an
Annual Maximum Fee Movement rate of 6 per cent for 2025, which I will consult on later in 2024 through a notice
published in the New Zealand Gazette.”
This proposed rate reflects that fees have increased by significantly less than inflation in recent years, making it
harder for providers to maintain the quality of their courses.
“Over the last three years inflation has overtaken the interest rate paid by overseas-based student loan debtors by 9.6
per cent. So we’re increasing the interest rate charged to student loan borrowers based overseas by 1 per cent for five
years, from 3.8 per cent to 4.8 per cent. This will take effect from 1 April 2025.”
The late payment interest for overseas and New Zealand based borrowers will also increase by 1 per cent.
“Taken together these initiatives are a sensible approach to tertiary education funding. They reward hard working
students, support new apprentices and employers, bolster tertiary providers who are doing it tough and help to keep
borrowers accountable to taxpayers,” Penny Simmonds says.