Final year of Labour’s fees-free saw lowest university uptake among the disadvantaged

But only 1.3% of the fees-free students at university in 2024 came from EQI 7 schools. In actual numbers, this translated to 230 fees-free university students in 2024 from EQI 7 schools, while there were 775 students from EQI 6 schools. Both of these are the lowest numbers on record for the scheme’s six-year history.

The flagship policy from the Labour-led Government provided up to $12,000 in tuition fee payments for the first year of provider-based study, or the first two years of work-based learning.

It was billed as opening the doors of tertiary education to those for whom they would normally be shut, and was expected to increase participation in first-year tertiary study by up to 15%.

As various Herald analyses have shown, it has had the opposite impact in terms of equity, with ever-higher proportions of students taking up the scheme from wealthier households.

It has also had no impact on participation, according to a Ministry of Education analysis, which described it as a “high deadweight cost, as these policies cover the fee cost for learners who would otherwise be able to finance the fees themselves”.

The analysis looked at the 2018-2023 data, but in 2024, there was no last-gasp rush to make use of first-year fees-free.

In 2024, only one in seven (14.3%) of fees-free students at university came from EQI 5-7 schools, that is, schools where students had above-average socio-economic disadvantage. (EQI 4 school students are those with average socio-economic barriers.)

This cohort has been shrinking; the proportion in 2020 was 15.9%.

The proportion of disadvantaged Year 13 students taking up fees-free for university the following year has also been shrinking.

In 2023, 9.9% of Year 13 students from EQI 7 schools used the scheme for university the following year, down from a peak of 13.2% of the 2020 Year 13 cohort.

For Year 13 students in EQI 6 schools, the fees-free cohort heading to university the following year fell from 18.4% in 2020 to 16.2% in 2023.

The trend reversed for provider-based non-university fees-free students, including those at Te Pūkenga or enrolled at wānanga.

More than a quarter (26.4%) of Year 13 students in EQI 7 schools in 2023 moved to such providers in 2024, up from 21.8% in 2022, but down from the peak of 35.5% in 2020.

It’s harder to provide an accurate figure for the proportion of fees-free students from wealthier backgrounds at university. In 2024, 60.8% of all fees-free students at university came from EQI 1, 2 and 3 schools, but this figure excludes fees-free students from private schools, which don’t have an EQI score.

There were 2210 fees-free students in 2024 with no EQI or decile information from their final year of high school.

Assuming most of them are from wealthier backgrounds, the proportion of fees-free university students from above-average socio-economic circumstances jumps from 60.8% to above 70%.

The failure to lift participation, particularly among poorer students, was not lost on Labour.

In 2019, the then-Labour Government redirected $197 million in fees-free funds that hadn’t been spent, due to a lack of uptake.

The following year, it shifted the policy’s purpose to reducing student debt levels.

This was self-fulfilling – a blanket policy, paid following enrolment – and was the only one out of four objectives that was achieved, the ministry’s analysis said.

The failed objectives were:

“It’s a tremendous way to spend a lot of money to no effect,” tertiary education consultant Roger Smyth, who used to work at the ministry, told the Herald.

“They seriously believed it would make a big difference to participation.

“But the drivers of tertiary education participation occur in early childhood, the expectations built up in children’s minds through their schooling, through parenting, and so on, which keep getting reinforced year by year through the schooling system.”

Access to money was only a “small component” of what drives participation, Smyth said, but fees-free made no difference to students in terms of cash in the hand.

“All the scheme paid was your fees, but you could borrow anyway, so nobody was better off, in cash terms.

“It made a difference in debt terms, which meant that six, seven, eight years down the track, you paid your loan off a year or so earlier - at the very point when you didn’t need it so much.”

Switching fees-free so it applies to a student’s final year of study is committed to in the National-NZ First coalition agreement.

It is hoped to incentivise more students to complete their studies than would otherwise happen.

But officials said there was little evidence to support this.

“Evidence suggests that fees are not a significant barrier to learner participation in tertiary education. Indeed, evidence suggests that fees and fees-free policies have no real effect on learner behaviour,” the ministry analysis said.

“A fees-free policy does not specifically address the main barriers to participation, or effectively steer the system towards meeting learner and labour market needs.”

The reshaped scheme could also worsen equity, officials warned; Māori and Pacific students are generally more likely to start but not finish their studies, and are therefore less likely to reap the financial assistance of a final-year fees-free policy.

The ministry recommended axing the policy altogether; it costs hundreds of millions of dollars a year for essentially no beneficial change, though applying it to the final year of study will at least cost less than the first-year scheme.

The first year of the revised scheme was 2025, though to prevent double-dipping, those who had benefitted from the first-year fees-free policy were ineligible.

Derek Cheng is a senior journalist who started at the Herald in 2004. He has worked several stints in the press gallery team and is a former deputy political editor.