Budget 2024 Revamps Tertiary Education Policies, Prioritizing Completion and Quality

Acknowledging the shortcomings of the first-year Fees Free policy, Minister Simmonds announces a significant reform, transitioning the scheme from the first year to the last year of study.

Tertiary Education Minister Penny Simmonds unveils Budget 2024's strategic overhaul of tertiary education policies, emphasizing a shift towards incentivizing completion and ensuring quality outcomes for learners, businesses, and tertiary education providers. With a critical assessment of previous initiatives, Minister Simmonds highlights the need for a more effective approach to tertiary education funding to drive improved participation rates and better educational outcomes.

Acknowledging the shortcomings of the first-year Fees Free policy, Minister Simmonds announces a significant reform, transitioning the scheme from the first year to the last year of study. This shift aims to incentivize students to successfully complete their studies, aligning with the government's commitment to rewarding hard work and success. Eligibility for the revised scheme, commencing January 2025, will mirror previous settings, encompassing provider-based and work-based learners at Level 3 and above on the NZQA framework.

The reform is projected to generate substantial savings of $877 million while fostering better educational outcomes. Additionally, Budget 2024 allocates $65 million over four years for the Apprenticeship Boost scheme, enabling apprentices to continue earning while training towards their qualifications. Employers supporting second-year apprentices will receive ongoing monthly payments, with first-year apprentices in key industries becoming eligible for subsidies from January 2025.

A total of $266 million in additional operating funding over the next four years is earmarked to augment tuition and training subsidies for tertiary education providers by 2.5 percent. Universities are set to benefit significantly from this funding injection, with an estimated $136 million allocated over four years, contingent upon the Tertiary Education Commission's investment decisions and actual delivery volumes.

To alleviate cost pressures and uphold the quality of course delivery, Budget 2024 proposes an Annual Maximum Fee Movement rate of 6 percent for 2025. Minister Simmonds will initiate consultations on this proposal later in 2024 to ensure alignment with providers' needs and the evolving educational landscape.

Addressing the disparity between inflation and interest rates paid by overseas-based student loan debtors, Budget 2024 announces an increase in the interest rate charged to these borrowers by 1 percent, from 3.9 percent to 4.9 percent, effective April 1, 2025. Additionally, late payment interest for overseas and New Zealand-based borrowers will also increase by 1 percent.

Minister Simmonds emphasizes that these initiatives represent a pragmatic approach to tertiary education funding, fostering a supportive environment for hardworking students, new apprentices, and tertiary providers. By aligning incentives with outcomes, Budget 2024 aims to uphold accountability to taxpayers while nurturing a sustainable and high-quality tertiary education sector.