Affordability of tertiary education

What We Have Found

The average fees for tertiary education have increased slightly in recent years when compared with changes in average weekly income, but are still below those of the 2000 year.

Date Updated: May 2013

Indicator Description

The ratio of the average domestic student fee to the average weekly income of employed person.

Why This Is Important

Affordability is one element of opportunity to learn at tertiary education level, and tertiary education is increasingly the gateway to a higher standard of living and central to national wellbeing.  However, participation in tertiary education remains unevenly distributed.  There is a range of reasons for this, including prior achievement at school and the impact of family resources through the school years.

The direct cost of tertiary education to learners is one factor that can affect participation decisions and is an important feature of all tertiary education systems.  Because of concerns about access, affordability and the need for lifelong learning, the Government makes direct financial assistance available to many tertiary students.  This includes repayable, subsidised loans for tuition fees, course costs and living expenses and, for low income students, non-repayable grants for living expenses (student allowances).

Affordability is a complex matter and is not adequately captured by tuition fee levels, particularly for older students, together with the student financial support arrangements mitigating direct costs, part-time study and students combining work and study.

This indicator looks at affordability by examining the costs of enrolling in tertiary education in relation to income, as well as the average amount borrowed by students and average loan balance for people holding a student loan.

Recent studies confirm that participation in tertiary education depends on a combination of achievement at school, ability, and family resources (including income).  The extent to which personal and family financial resources play a role in determining opportunity for tertiary education is unclear.

How We Are Going

In 2011, the estimated average cost of domestic student fees for tertiary students at public institutions (on an equivalent full time basis for one year of study) was $4,464.

This is 4.7 times the average weekly income for an employed person.  Relative to average income, the tuition costs of attending university were highest, and the tuition costs of attending wānanga were lowest.

Since 2003, the average affordability of tertiary education worsened slightly in all sectors. Wānanga have been proportionally the most affected by the change in affordability, although their fees remain lower than other sectors. The 2011 ratio of average domestic fee to average weekly income remains well below that in 2000, when the average cost of domestic student fees was equal to 5.7 times the average weekly income for an employed person. After increasing across all sectors from 1997 to 2000, there was a large decrease in the fee to income ratio from 2000 to 2003.  The reduction was most pronounced at wānanga where it fell 88% between 2000 and 2003, with the most dramatic reduction occurring in 2001 through the introduction of free-fees policies for many courses in wānanga.  In addition, between 2001 and 2003 the Government introduced a fee stabilisation policy which allocated additional funding for providers that agreed to freeze their fees. Since 2004, fee increases have been restricted by Government regulation.

Figure 1: Ratio of average domestic fee at tertiary institutions to average weekly income for employed persons, by sub-sector (1997 to 2011)  


  1. Source: Ministry of Education (2011); Statistics New Zealand (2011)

These results must be interpreted in light of the fact that in New Zealand, highly subsidised Government student loans enable eligible students to borrow the full amount of their fees.  Over 80% of full-time students and around 50% of part-time students used the loan scheme in 2011.  Income is also supplemented for those low-income students and their families who are eligible for student allowances. In 2011, the average amount borrowed by each student was $7,633 (excluding administration fees and interest charged on the loan), a 4.6% nominal increase from the amount for 2010 ($7,298).  Up until 2003, the average amount borrowed by each student had increased each year since 1993, except for 1999 when the average amount decreased due to changes in government policies.  This policy, introduced to restrict the uses to which finance from the scheme could be employed, was revoked in the following year.  Following 2004, the trend in increased borrowing continued to 2011. Since 1997, the average amount borrowed per student in nominal terms has risen by only 2.4% per annum. In real terms (when there has been inflation adjustment) there was actually a decrease in borrowing of 1.4% from 1997 to 2011, and 0.7% from 2010 to 2011. The way that data on student loan balances is held has recently changed. Up until June 2011, data was held in separate systems by the Ministry of Social Development (MSD) and Inland Revenue (IR). From 1 April 2012, all loan information was transferred from MSD to IR on a daily basis, so for June 2012 (the 2011 data point below) nominal balances are from data held by IR for all borrowers. The average student loan balance was $18,539 in 2011, an increase of 10.8% from 2010 and almost two times higher than the average balance in 1997. The sharper lift seen for 2011 is caused by the change in administration of loans on 1 April 2012, when the daily transfer was implemented. In real terms, this increase was 9.8% from 2010 to 2011, and a 29.9% increase from 1997.

Figure 2: Average amount borrowed annually and average student loan balance held by Inland Revenue under the student loan scheme (1993 to 2011)

  1. Source: Ministry of Social Development (2011); Inland Revenue (2011).