Fees Free Policy Failure: Final Year of Labour's Scheme Sees Lowest University Uptake Among Disadvantaged Students

What Was the Fees Free Policy and How Did It Evolve?

The Fees Free policy, formally known as the First-Year Fees Free scheme, was introduced by New Zealand's Labour Government in 2018 as a flagship initiative to make tertiary education more accessible. It offered eligible first-time learners up to NZ$12,000 in tuition fee coverage for their initial year of full-time equivalent study at approved providers, including universities, polytechnics (now part of Te Pūkenga), wānanga, and private training establishments. The policy targeted boosting overall participation in tertiary education, particularly among underrepresented groups, while reducing student debt burdens. 92 91

Eligibility required learners to be New Zealand citizens or residents, studying at New Zealand Qualifications Framework (NZQF) Level 3 or above, and not have previously received Fees Free or completed a qualification at that level. Over its seven-year run from 2018 to 2024, the scheme cost hundreds of millions annually, with government expenditure peaking amid hopes it would transform access to higher education institutions like the University of Auckland, University of Otago, and Victoria University of Wellington.

By 2024, Labour's final full year before the October election defeat, subtle shifts emerged. The incoming National-led coalition government, per its agreement, replaced the first-year model with a final-year Fees Free from January 1, 2025. This new iteration pays up to $12,000 upon completion of a learner's first qualification, aiming to incentivize persistence and completion rather than entry. The Tertiary Education Commission (TEC) administers both, verifying eligibility via Inland Revenue Department (IRD) data. 89

Shocking 2024 Data: Record-Low University Uptake Among Disadvantaged Students

Newly released enrollment figures for 2024 paint a damning picture of the policy's equity shortcomings. Across provider-based tertiary education, 26,490 students accessed Fees Free, a marginal rise from 25,535 in 2023. However, at universities—the pinnacle of higher education aspiration—disadvantaged uptake hit rock bottom. Only 230 students (1.3% of the total) hailed from Equity Index (EQI) 7 schools, the most socio-economically challenged category combining factors like income, employment, and ethnicity. Another 775 came from EQI 6 schools, also the lowest recorded in the scheme's history. 92 50

The EQI, developed by the Ministry of Education, replaced the old decile system in 2021 to better measure school-level disadvantage. EQI 1 represents the least disadvantaged (often high-fee independent schools), while EQI 7 flags the highest barriers. Shockingly, 60.8% of Fees Free university students originated from EQI 1-3 schools, with over 70% when including those without EQI data (typically wealthier independents). Just 14.3% were from EQI 5-7, down from 15.9% peak in 2020.

This table underscores the widening gap, with no 'last-gasp' surge in Labour's final year. 90

Who Are New Zealand's Disadvantaged Tertiary Learners?

Disadvantaged students in this context include those from low-EQI schools, Māori and Pasifika peoples, first-in-family learners, and rural/remote communities. Māori participation in tertiary education stands at 16%, Pasifika at 15%, compared to 10% for Europeans, per Ministry data. Yet, completion lags: 50% for Māori and 48% for Pasifika at bachelor's level and above, versus 62% overall. These groups often enter via non-university pathways like wānanga or Te Pūkenga institutes but struggle with retention due to financial pressures, family obligations, and academic preparation gaps. 91

For university specifically, low-EQI Year 13 cohorts show stark transitions: EQI 7 uptake for Fees Free uni dropped from 13.2% in 2020 to 9.9% in 2023. Non-university providers fared better at 26.4% for EQI 7 in 2024, highlighting how Fees Free funneled disadvantaged learners away from degree programs.

• Māori Learners: Higher entry rates but attrition in early years due to whānau responsibilities.
• Pasifika Learners: Similar patterns, compounded by urban overcrowding and employment pulls.
• Low-Income/Rural: Opportunity costs like part-time work deter full commitment.

Why Did Fees Free Fail to Boost Disadvantaged University Access?

Ministry of Education analysis reveals fees were never the primary barrier. Participation rates declined steadily from 2009-2020, unaffected by the scheme. Key roadblocks include:

• Prior educational achievement and parental qualifications shaping aspirations from early childhood. 92
• Living costs, transport, childcare—unaddressed by fee waivers alone.
• Awareness gaps: Many eligible disadvantaged students unaware or distrustful of government schemes.
• Deadweight loss: 70%+ benefited those who would study anyway, per international parallels like Ecuador and Ireland. 91

Tertiary consultant Roger Smyth called it "a tremendous way to spend a lot of money to no effect," emphasizing early interventions over late-stage subsidies. ACT leader David Seymour echoed: the policy subsidized the wealthy while the needy entered workforces directly. 92

Stakeholder Perspectives: Universities, Government, and Experts Weigh In

Universities New Zealand CEO Chris Whelan noted the scheme failed its equity mandate, with data showing no participation lift. The TEC's Supplementary Analysis Report (2025) confirmed: only debt reduction achieved, no behavioral change. 91 Labour defended it as debt relief amid cost-of-living crises, while critics like National highlighted $197 million unspent in 2019 redirected elsewhere.

Equity advocates call for targeted scholarships over blanket policies. For aspiring lecturers or researchers, platforms like university jobs NZ offer pathways beyond traditional entry.

Broader Impacts: Equity Gaps, Economic Ramifications, and University Finances

The policy exacerbated divides: Wealthier students flocked to universities like Auckland and Canterbury, while disadvantaged opted for vocational training. Economically, missed talent pools hinder innovation; Māori/Pasifika underrepresentation in high-skill fields persists. Universities faced stable but untargeted funding, with Fees Free covering just a fraction of international fees (capped domestically).

Long-term, lower completion drags workforce productivity. Consider a Māori student from an EQI 7 school in South Auckland: Fees Free covers entry, but without wraparound support, dropout looms, perpetuating cycles.

International Lessons: Why Fees-Free Models Often Underperform

Globally, fee abolition yields high deadweight: Ireland saw no low-SES surge post-removal; UK's fee hikes didn't dent participation. NZ's robust Student Loan Scheme (interest-free while studying) already mitigates fees, making Fees Free redundant for most. Targeted aid—like Australia's equity scholarships—proves more effective.

The New Final-Year Model: Will It Fare Better for Completion?

From 2025, learners completing their first Level 3+ qualification get final-year fees reimbursed, excluding prior first-year beneficiaries. Projected savings: $879 million by 2028, but equity risks remain—Māori/Pasifika lower completion disqualifies many. TEC urges monitoring; early 2026 applications via IRD show promise, but uptake data pending. 89

For those eyeing higher ed careers, higher ed career advice can guide from undergrad to faculty roles.

Pathways Forward: Targeted Solutions for Disadvantaged Access

• Expand student allowances and hardship funds for living costs.
• Bridge programs at unis like Waikato's Māori/Pasifika pathways.
• Regional hubs for rural learners, partnering with NZ academic opportunities.
• Data-driven scholarships via TEC, prioritizing EQI 5-7.
• Mentoring: First-in-family networks to build aspirations early.

Institutions like Massey University exemplify success with targeted cohorts, boosting Māori graduation by 10% via cultural support.

Photo by Jana Shnipelson on Unsplash

Future Outlook: Rebuilding Tertiary Equity in New Zealand

As 2026 unfolds, with final-year Fees Free bedding in, focus shifts to holistic reforms under the Tertiary Education Strategy 2025-2030. Universities must innovate: flexible online degrees, work-integrated learning. For job seekers, explore higher ed jobs, lecturer jobs, or university jobs amid sector growth.

Prospective students: Check TEC eligibility, leverage career advice. AcademicJobs.com supports your journey—rate my professor for informed choices, post a job for employers.