Under sections 159L(3)(d) and 159M(b) of the Education Act 1989 (“Act”), the Minister of Education (“Minister”) gives notice of the proposed conditions setting limits on fees that tertiary education organisations (TEOs) may charge to domestic students in 2021.

Notice

1. Title

This notice may be cited as the Tertiary Education (2021 Fee Maxima) Notice 2020.

2. Commencement

The proposed conditions outlined in this notice apply for the 2021 calendar year only.

3. Interpretation

In the conditions set out in this notice, unless the context otherwise requires,—

1. Course means part of a programme of study that leads to the award of a qualification on the New Zealand Qualifications Framework (NZQF), including a certificate, diploma, degree, or postgraduate qualification. For the avoidance of doubt, this includes a course that is part of a qualification where the student is not enrolled in the qualification (for example, where a student is only enrolled in the course or where the student is undertaking the course as part of a training scheme or micro-credential); and
2. Training scheme means study or training that leads to an award but does not, of itself, lead to a qualification listed on the NZQF, but excludes micro-credentials; and
3. Micro-credentials are a sub-set of training schemes that certify achievement of a coherent set of skills and knowledge and that have evidence of need by industry, employers, iwi and/or the community; and
4. Fees means tuition fees, compulsory course costs, examination fees, other charges associated with a programme of study, material charges, cost of field trips and any compulsory purchase of equipment or books through the organisation; and
5. TEO means an organisation as defined in section 159B of the Act.

4. Proposal

I propose to specify the following conditions under section 159L(3)(d) of the Act that the Tertiary Education Commission (TEC) must attach to funding provided under the funding mechanism for Student Achievement Component funded provision at level 3 or above on the NZQF (SAC L3+):

1. the annual limits by which TEOs can increase fees charged to domestic students for courses or training schemes; and
2. the conditions on fees charged to domestic students by TEOs for new courses or training schemes; and
3. the conditions that cap the fees charged to domestic students by TEOs for micro-credentials; and
4. other conditions in relation to fees that the TEC must attach to the SAC L3+ funding mechanism; and
5. the proposed conditions do not apply to fees for courses that are at level 1 and 2 on the NZQF, which remain subject to the conditions as set out in the Tertiary Education Fees-Free Conditions Notice [2015] and The Tertiary Education Fees-Free (Levels 1 and 2) Conditions Notice [2016].

5. Call for Submissions

Any student, student organisation, TEO or any other person, body or organisation having an interest in the matter, is invited to make a submission on the proposed fee regulation conditions set out in this notice.

All submissions should be sent either by email to: tertiary.strategy@education.govt.nz or by post to: Fee Maxima Submissions, Tertiary Education Policy, Ministry of Education, PO Box 1666, Wellington 6140.

6. Date for Submissions

All submissions must be received by 20 August 2020.

Dated at Wellington this 30th day of July 2020.

Hon CHRIS HIPKINS, Minister of Education.

Proposed Conditions

General

1. These conditions apply to fees charged by all TEOs for provision funded through SAC L3+.
2. The fees charged by a TEO are subject to these conditions if the TEO is the sole source of the item to which the fee relates.

The Annual Maximum Fee Movement

3. The Annual Maximum Fee Movement (AMFM) sets the maximum percentage that TEOs may increase their domestic tuition fees by each year for all SAC L3+ funded courses or training schemes.
4. For 2021, the Minister proposes that the AMFM is set at 1.1 percent. This would permit a 1.1 percent increase on the fees (GST exclusive) charged in 2020 to domestic students for SAC L3+ funded courses or training schemes.
5. The proposed 1.1 percent AMFM is in line with forecast inflation for 2021 as determined in the Budget Economic and Fiscal Update in May 2020.
6. The AMFM applies to any new courses or training schemes established by a TEO in substitution for an existing course or training scheme dealing with the same or similar subject matter, at a same or similar level on the NZQF, for which SAC L3+ funding can be used.

Exceptions to the Annual Maximum Fee Movement

7. A TEO may apply for an exception from the 2021 AMFM on the basis of exceptional circumstances. Any exception granted will not exceed an additional 1.1 percent increase over and above the permitted 1.1 percent increase.
8. In considering exceptional circumstances, the TEC must only have regard to the following criteria:
1. the TEO is unable to support the course(s) or training scheme while remaining financially viable; and
2. where the course is part of a qualification at levels 3–8 on the NZQF that has been delivered previously, the qualification has a cohort-based completion rate that meets or exceeds the median performance benchmark for that NZQF group in the previous year; and
3. the TEO can demonstrate that the course or training scheme is in some way unique or special, for example, that there are no available local alternatives; and
4. not allowing an exception will prevent the TEO from making a significant contribution to the achievement of one or more of the Government’s priorities, as set out in the current Tertiary Education Strategy.
9. An application must satisfy all criteria to gain an exception.

Low or Zero Fee Courses or Training Schemes

10. If the fees for a course or training scheme funded through SAC L3+ are less than $511.11 (GST inclusive) ($444.44 (GST exclusive)) per equivalent full-time student (EFTS) in 2020, then for 2021, the TEO may increase the fee to up to $511.11 (GST inclusive) ($444.44 (GST exclusive)) per EFTS, or can increase the fee for the course or training scheme by 1.1 percent, whichever is the greater.

Fee Setting Limits for New Courses or Training Schemes

11. The fees for a new course or training scheme established by a TEO and funded through SAC L3+ must be no more than the 75th percentile from the range of fees charged for similar courses or training schemes. The TEC will specify how similar courses or training schemes will be determined.
12. The above fee setting limits apply to any new courses or training schemes funded through SAC L3+, except where the course or training scheme is in substitution for an existing course or training scheme dealing with the same or similar subject matter, at a same or similar level on the NZQF. Substitute courses or training schemes are subject to the AMFM.

Exceptions to Fee Setting Limits for New Courses or Training Schemes

13. A TEO may apply for an exception from the fee setting limits for new courses or training schemes on the basis of exceptional circumstances.
14. In considering whether or not there are exceptional circumstances, the TEC must only have regard to the following criteria:
1. the course or training scheme would be financially unviable without a higher fee; and
2. where the course is part of a qualification at levels 3–8 on the NZQF that has been delivered previously, the qualification has a cohort-based completion rate that meets or exceeds the median performance benchmark for that NZQF group in the previous year; and
3. the TEO can demonstrate that the course or training scheme is in some way unique or special, for example, there are no or very few similar courses or training schemes to compare fees with; and
4. the course or training scheme is aligned to Government priorities as set out in the Tertiary Education Strategy.
15. The TEC must only grant an exception if it is satisfied that the TEO meets all of the above criteria.
16. The TEC will have discretion to determine how much a TEO can set fees for any new courses or training schemes granted an exception.

Fee Capping Limits For Micro-credentials

17. The fees for a micro-credential must be no more than $60 (GST inclusive) per credit (excluding components made up of courses that also lead to the award of a qualification and are funded through SAC L3+).
18. Where a micro-credential is wholly or partly comprised of courses that also lead to the award of a qualification and are funded through SAC L3+, the fees for these courses must be equal to or less than the maximum fee permitted for the course under the AMFM and fee setting limits for new courses or training schemes. The fees for the components that are not part of existing courses must be no more than $60 (GST inclusive) per credit.

Exceptions to Fee Capping Limits for Micro-credentials

19. A TEO may apply for an exception from the fee capping limits for a micro-credential (or components of a micro-credential that are not made up of existing courses) on the basis of exceptional circumstances.
20. In considering whether or not there are exceptional circumstances, the TEC must only have regard to the following criteria:
1. the TEO can demonstrate that the fee cap makes it financially unsustainable to offer the micro-credential, in terms of the costs of delivering the micro-credential and taking into account the total income that the micro-credential would receive (including government funding and fees), and that there are no satisfactory alternatives to limit costs; and
2. the TEO must provide evidence that there is strong support from industry and/or employers to deliver the micro-credential and that this clearly meets industry and/or employer needs.
21. The TEC must only grant an exception if it is satisfied that the TEO meets both of the above criteria.
22. The TEC will have discretion to determine how much a TEO can set fees for any micro-credential granted an exception.

Note: Effect of this Notice

These notes do not form part of this notice, but are intended to indicate its general effect.

1. Section 159L(3)(d) of the Act provides that the Minister, when determining the design of a funding mechanism, may specify the conditions that the TEC must attach to funding provided under the mechanism, including conditions that limit the fees that an organisation may charge domestic students.
2. Under section 159M(b) of the Act, the Minister may not specify conditions that set limits on the fees that organisations may charge domestic students until:
1. the Minister has published a notice in the New Zealand Gazette that –
   1. states that the Minister proposes to specify such conditions; and
   2. sets out the proposed conditions; and
   3. invites submissions on the proposed conditions; and
   4. specifies the date by which submissions must be received, which must be a date no later than 21 days after the date of the New Zealand Gazette notice; and
2. the date by which submissions must be received has passed.
3. The conditions setting limits on fees subsequently specified by the Minister in accordance with section 159L(3)(d) of the Act must be imposed as conditions on funding payable by the TEC to an organisation under section 159YA and 159ZC of the Act.
4. Under sections 227(1A) and 234A of the Act, TEIs and PTEs respectively must not charge domestic students a fee that exceeds the maximum specified as a condition on funding approved by the TEC under section 159YA and section 159ZC of the Act.