Revealed: Only 1500 students have benefited from final year fees-free
The Government’s final-year fees-free scheme, which is about to be axed, has benefited only 1557 students so far.
This is a tiny fraction of the 40,000-50,000 students who used the scheme each year when it applied to the first year of tertiary study.
The reason is the double-dip rule, meaning students who used the scheme for their first year of study were not eligible to use it for their final year.
As of May 4 this year, final-year fees-free payments had been made to 1474 learners who completed their qualification in 2025, and 83 who completed their qualification in 2026, according to the Tertiary Education Commission.
“As learners have up to 12 months from their completion date to apply for their fees-free payment via IR [the Inland Revenue Department], learners who have completed from January 1, 2025, and haven’t received first-year Fees Free can still apply for payment until the end of this year to be counted as a 2025 learner.”
Last week, after a leak from New Zealand First leader Winston Peters, Finance Minister Nicola Willis confirmed that the scheme would be scrapped in this year’s Budget, which will be announced on May 28.
The money will instead be spent on trades training, though the finer details are not yet known.
The axing has triggered anger among university students, who feel the policy should be honoured for those who started studying when the final-year form was implemented, and who are yet to finish their studies.
Other students are upset because their studies will inevitably become more expensive.
Labour leader Chris Hipkins has not said whether he will campaign on restoring the fees-free policy, saying he wants to know more about how the money will be spent instead. He has added that he would not restore it in its original form without some changes.
About $350 million a year was set aside to cover fees-free.
‘Deadweight’
The policy was introduced in 2018 after being a key part of Labour’s 2017 election campaign. It applied to the first year of tertiary study and was to be progressively rolled out to cover three years, though that never eventuated.
It 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 improving equity and opening the doors to higher learning for disadvantaged people to whom they would otherwise be closed.
But the opposite happened, as various Herald analyses have shown. The scheme’s beneficiaries were increasingly students from wealthier households.
The Labour-led Government also expected – and budgeted for – more people to enter tertiary education, which failed to materialise.
“There was no noticeable effect on general participation in tertiary study,” a Education Ministry-led analysis, which looked at the fees-free data from 2018 to 2023, said.
Nor did the policy lead to an expected increase in “first-in-family” enrolments.
“Overall, learner demographics did not significantly change as a result of first-year Fees Free. Over the years 2017 to 2022, European, Māori, Pacific and Asian participation rates stayed relatively steady.”
A Herald analysis of the 2024 data, the final year in which it applied to the first year of study, showed that the number of disadvantaged students using the scheme for university had slumped to the lowest figure in its short history: only 1.3% of the fees-free students at university in 2024 came from EQI 7 schools.
The failure to shift the dial as intended was so evident that, in 2020, Labour shifted the policy’s purpose to reducing student debt levels.
Keeping the policy in amended form – for the final year of study instead of the first year – was part of both the National-Act and National-NZ First coalition agreements. It had three objectives:
- to incentivise learners, particularly disadvantaged ones, to finish their studies;
- to reward learners who complete their programme of study;
- to reduce the overall cost of study.
Last year, the ministry advised the Government to axe it, calling it a “deadweight” policy.
The first objective was unlikely to be met. “Particularly for degree-level study, once a learner reaches their ‘final year’, they are already more likely to complete than those first entering study”, the ministry’s analysis said.
“The knowledge that they will receive a refund of fees for their final year is unlikely to change that outcome.”
The second was essentially meaningless. “The policy, by definition, rewards completion of qualifications. This makes the second objective a self-fulfilling outcome.”
The third would likely succeed, thereby at least helping the Government’s books with some “moderate cost savings”.
New research from the Auckland University of Technology reinforced the ministry analysis, calling fees-free an expensive way to achieve very little.
The research used Stats NZ’s Integrated Data Infrastructure to follow more than 250,000 school leavers from the 2015 to 2019 cohorts. It found little evidence that fees-free widened tertiary access.
“We also found no clear evidence the policy encouraged students to enrol in bachelor’s degrees rather than certificate or diploma-level study, or that it improved retention or completion,” co-authors Lisa Meehan, AUT’s NZ Policy Research Institute director, and PhD candidate Cristóbal Castro said.
“Students from higher-decile schools were already more likely to enter tertiary study, and a key question was whether a fees-free scheme narrowed that gap. It did not.”
Students condemn axing it
Seven student associations, representing AUT, the National Disabled Students’ Association, and the universities of Victoria, Waikato, Otago, Auckland and Lincoln, have issued a statement calling on the Government to keep fees-free for future student cohorts.
Victoria University of Wellington Students’ Association president Aidan Donoghue called axing the policy a “retrograde step”.
“At a time when many households are experiencing acute cost pressures, this move will saddle students with more eye-watering debt, deter capable New Zealanders from upskilling, and will widen inequities in access and completion.
“If the Government is serious about lifting productivity, strengthening public services, and ensuring opportunity is not determined by family income, it should retain fees-free and invest in learners, rather than shifting costs onto those least able to absorb them.”
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.