Funding mechanism

The Minister responsible for tertiary education issues the DQ7+ funding mechanism. The funding mechanism outlines the general form and essential components of the fund. It provides the mandate for the Tertiary Education Commission (TEC) to allocate the funding, what the funding can be used for, and details how we administer the fund.

Funding is agreed through a TEO’s Investment Plan (ie, it is on-Plan funding). For more information see Plan Guidance and Toolkit.

A tertiary education organisation (TEO) that receives DQ7+ funding is required to:

• comply with the requirements of the Education and Training Act 2020, and
• comply with the funding conditions for the relevant year specified in its funding approval documentation.

The overall amount of DQ7+ funding available is set through the Government’s annual budget process. We determine the appropriate amount of DQ7+ funding for a TEO through the annual investment process and through additional funding if available.

Annual Maximum Fee Movement (AMFM)

There are limits on the course fees (including course costs) that you can charge domestic learners. The purpose of fee regulation is to support affordable study for learners while allowing some flexibility in setting fees.

The Annual Maximum Fee Movement (AMFM) sets limits on the fees you can charge for existing courses or courses that are substitutes for existing courses.

The AMFM policy applies to all courses at Levels 3 and above on the New Zealand Qualifications and Credentials Framework (NZQCF):

• with fees that all domestic learners are required to pay, and
• that have been funded in a previous year (or years).

The AMFM also applies to courses established by a TEO in substitution for an existing course on the same or similar subject matter, at the same or a similar level on the NZQCF.

For more information about the AMFM and when a new course is considered a substitute course, see the DQ7+ funding conditions for the relevant year.

Note: Fee increases can only be applied annually. Courses where the AMFM was not applied the previous year are not eligible to “catch up” fees in the following year.

Exceptions to the AMFM

Applications for exceptions are considered annually, in the year before the course will be delivered. We may only grant an exception to the AMFM policy under exceptional circumstances.

We will only grant an exception if all the following criteria are met:

• you are unable to support the course while remaining financially viable
• for a course at Levels 3–8 on the NZQCF that is part of a programme leading to a qualification, the completion rate for that qualification met or exceeded the median performance benchmark for that level in the previous year
• you can demonstrate that the course is in some way unique or special (for example, there are no local alternatives to the course available), and
• not allowing the exception will prevent you 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.

See the funding conditions for the relevant year  for information on AMFM exemptions.

The exception criteria are specified in The Tertiary Education (2023 Fee Regulation Settings) Notice 2022.

How to apply for an exception to the AMFM

Once the AMFM rate for 2024 has been agreed, information will be provided to support the exception application process.

Setting fees and course costs for new courses

Exceptions to fee limits for new courses

Fees for a new course funded through DQ7+ must be no more than the 75th percentile of the range of fees charged for similar courses.

When identifying similar courses we consider the course:

• Funding category;
• New Zealand Standard Classification of Education (NZSCED); and
• Equivalent full-time students (EFTS) factor.

In exceptional circumstances you may apply for an exception to the limit on new course fees. The exception criteria are specified in Replacement Notice – The Tertiary Education (2023 Fee Regulation Settings) Notice 2022.

In determining exceptions, we consider all the following criteria:

• the TEO can demonstrate that the course is in some way unique or special, for example, there are no or very few similar courses to compare fees with
• the course is aligned to Government’s priorities, as set out in the Tertiary Education Strategy (TES)
• the course is part of a programme of study that would be financially unviable without a higher fee, and
• where the course is part of a qualification at Levels 3–8 on the NZQCF that has been delivered previously, the qualification has a completion rate that meets or exceeds the median performance benchmark for that NZQCF level in the previous year.

Questions

If you have any questions about the application process, please email our Customer Contact Group. We encourage you to ask any questions early.

Funding allocation

2024 indicative allocations, including those for DQ7+ funding are expected in early June.

Funding allocations, including any amendments are available through the My Allocations and Payments app on Ngā Kete.

For further information on indicative allocations including historical allocation methodologies see Indicative Allocations by year.

For more details regarding your specific allocation, please contact customerservice@tec.govt.nz or your Relationship Manager.

Funding calculation

We calculate a TEO’s consumed funding using:

• the number of valid domestic learner enrolments, measured by equivalent full-time learners (EFTS), and
• the qualifications, and their component courses, in which a valid domestic learner is enrolled.

To calculate a TEO’s consumed DQ7+ funding, we use the following elements:

• the metric (EFTS value)
• course classification
• funding category
• funding rates
• learner enrolments.

Example:

For details on funding refer to the DQ7+ funding conditions for the relevant year.

Re-enrolling a DQ7+ learner

Where a DQ7+ learner requires further study to complete their qualification, their study can only be to complete courses that they have not yet passed. This can include content not yet studied or content studied and assessed, but requiring a re-sit.

For example:

A TEO enrols a learner in all courses linked to a 60-credit (0.5 EFTS) qualification. The sum of the course EFTS factors is 0.5 EFTS.

The learner passes/achieves 30 credits from the 60-credit course enrolments. The TEO is funded 0.5 EFTS, for the 60 credits of courses the learner was enrolled in.

The TEO re-enrols the learner in a second period of study for the remaining 30 credits not yet achieved. The TEO is funded 0.25 EFTS for the 30 credits of courses the learner was re-enrolled in.

The learner successfully completes the courses and is awarded the qualification.

The learner will have received 0.75 EFTS worth of provision (90 credits), and the TEO will be funded for 0.75 EFTS delivery (0.5 + 0.25 EFTS) (assuming funding conditions are met for each course enrolment). Note: the TEO will report 0.25 EFTS (30 credits) unsuccessful course completions, and 0.5 EFTS (60 credits) successful course completions.

Calculating EFTS remaining vs consumed

To determine the exact value of the EFTS remaining for a returning learner, the following formula should be used:

For conditions on exceeding the total annual EFTS value of the qualification, see the DQ7+ funding conditions for the relevant year.

Funding rates

This page provides information on DQ7+ funding rates.

For detailed information on the Delivery Classification Guide and how it is used for funding see Delivery Classification Guide.

Flexible funding

We fund eligible TEOs for eligible DQ7+ provision above the amount the TEO has been approved to deliver. This is to provide TEOs with flexibility to meet additional learner demand.

Flexible funding:

• is payable for provision towards:
  • qualification courses that we have agreed to fund in your Mix of Provision (MoP) (for private training establishments), or
  • New Zealand Standard Classification of Education (NZSCED) volumes of provision that we have agreed to fund in your MoP (for tertiary education institutions)
• does not mean we have changed your approved funding allocation, and
• is subject to the conditions that we have imposed on your funding.

The external evaluation and review (EER) category referred to in the funding conditions will be the highest published EER category for the TEO during the funding year to which flexible funding is being applied.

Flexible funding is calculated using the December Single Data Return (SDR). Payment is made in March of the following year.

For the purposes of calculating flexible funding, the value of 10 EFTS of delivery is calculated using the average EFTS rate of a TEO’s total actual delivery (funded and unfunded), as determined by us.

The table below shows examples of how flexible funding is calculated (assuming a generic funding rate of $10,000 per EFTS to illustrate).

For further information see the DQ7+ funding conditions for the relevant year.

Payment and wash-ups

DQ7+ funding is paid in monthly instalments. The payment amounts are in equal instalments from January to June, and in equal instalments from July to December.

For more information on the calculation of funding wash-ups including methodology and technical specifications from the relevant year, see Funding wash-ups by year.

Suspending or revoking funding

Under clause 16 of Schedule 18 of the Education and Training Act 2020 (the Act), we may suspend or revoke some or all funding given under section 425 of the Act if we are satisfied on reasonable grounds that:

• when measured against performance indicators, the TEO has not achieved, or is not achieving, an outcome anticipated in its Investment Plan for a tertiary education programme or activity in relation to which funding has been given under section 425 of the Act
• the TEO has not complied, or is not complying, with a condition on which funding has been given under section 425 of the Act, or
• the TEO has not provided, or is not providing, adequate and timely information required by the TEC or Ministry of Education under section 425 of the Act.

If a TEO has its funding approval revoked in accordance with clause 16 of Schedule 18 of the Act, the unspent portion of funding is repayable to the TEC (for conditions see the DQ7+ funding conditions for the relevant year). We may arrange to offset the amount against any funding payable to the TEO.

Subcontracting

Subcontracting refers to a situation in which a TEO uses TEC funding to pay another organisation to deliver teaching or assessment on its behalf. This excludes:

• teaching and learning activities contracted to individuals or employers (for example, an employee on a fixed-term contract, an honorary staff member, or a contract for teaching and learning services with a subject-matter expert for part of the programme such as for First Aid provision)
• research activities or postgraduate research supervision, and
• learning that occurs within vocational placements such a workplace placement or practicum.

A TEO must not subcontract any DQ7+ funded activities without our prior written consent.

For conditions on subcontracting see the DQ7+ funding conditions for the relevant year.

Subcontracting can be agreed in two ways

Subcontracting can be agreed to within a TEO’s Investment Plan (“the Plan”). The subcontracting specified in the Plan is permitted for the period of the Plan. If the Plan expires then approval needs to be obtained from us again.

Subcontracting can also be agreed outside of a Plan by seeking our approval in writing. Again, the subcontracting specified is permitted for the period agreed with us.

At any time, TEOs can contact us to discuss proposed subcontracting.

Subcontracting TEO obligations

A TEO that has received approval from TEC to subcontract delivery to another party:

• must comply with any conditions imposed by us within a consent to subcontract; and
• must ensure that the subcontracted party does not further subcontract any functions; and
• will be accountable to us for the use of the DQ7+ funding, including in respect to legislative and funding condition requirements.

For more information see the DQ7+ funding conditions for the relevant year.

Student Loan Scheme payments

We are responsible for approving each qualification for access to Student Allowance and Student Loan Schemes. StudyLink assesses the eligibility of individual learners.

A qualification must be approved for DQ7+ funding before a learner can access Student Allowance and Student Loan Schemes for that qualification. For further information on eligibility visit StudyLink.

Note: We will not backdate approval for access to Student Allowance and Student Loan Schemes. Therefore, if applying for funding for a new qualification, you must provide all necessary information to TEC at least four weeks before the start of tuition for the qualification. This will ensure that each learner who is enrolled in an approved course or programme can access financial support if eligible.

Requesting tuition fees payment from StudyLink

If the learner has arranged to pay their fees through the Student Loan Scheme, you should:

• get the learner’s agreement to authorise the payment from their loan account
• send a “Verification of Study” to the Ministry of Social Development (StudyLink)
• receive confirmation that StudyLink has accepted the student’s loan application, and
• inform the learner in writing of arrangements concerning payment.

When requesting tuition fees from StudyLink ensure that the fees payment requested is for the:

• learner
• reported programme(s), and
• study period(s) listed in the “Verification of Study” (VoS) response.

Recognition of prior learning

Tuition fees requested from StudyLink, and EFTS the learner is enrolled in, must reflect the “course of study” that the learner is required to pay for and study after both recognition of prior learning (RPL) and previously awarded credits (CRT) have been recognised and removed from the learner’s programme of study or training (ie, not the tuition fee and EFTS for the whole programme).

Note: Payment of full tuition fees may not be requested from StudyLink and subsequently refunded to the learner after RPL.

Qualifications delivered full-time

We will only approve a DQ7+ funded qualification for learner access to Student Allowance and Student Loan Schemes if it:

• is quality assured by the New Zealand Qualifications Authority (NZQA) or the Committee on University Academic Programmes (CUAP)
• is delivered full-time
• runs for a minimum of 12 weeks, and
• has an EFTS value of at least 0.3.

Qualifications delivered part-time

A programme for a qualification of less than 0.3 EFTS is classified as part-time regardless of the number of weeks over which it is delivered. A part-time programme for a qualification is not eligible for learner access to learner allowances.

For a DQ7+ funded part-time programme leading to award of a qualification, we will only approve learner access to the Student Allowance and Student Loan Schemes if the programme meets one of the following criteria:

• it runs for 32 weeks or more and has an EFTS value of at least 0.3 EFTS, or
• it runs for fewer than 32 weeks with an EFTS value of between 0.25 and 0.3 EFTS.

Micro-credentials

Micro-credentials are not eligible for Student Allowance and Student Loan Schemes access.

Loan entry threshold (LET)

The loan entry threshold (LET) is used to identify the minimum EFTS value required for a learner’s individual study programme to be deemed full-time. This affects learner eligibility for Student Allowance and Student Loan Schemes. A qualification that is not deemed to be full-time (ie, not approved for access to Student Allowance and Student Loan Schemes) can nevertheless be funded through DQ7+.

The LET is determined by matching a range of gross weeks to a range of EFTS values. A gross week is the total length of enrolment in a programme of study, including holiday weeks (recess).

The table below shows this relationship. Qualifications of less than 0.3 EFTS may still be eligible for learner access to the Student Allowance and Student Loan Schemes.

 Student Allowances – paid practical work

Learners that undertake paid practical work as part of their course of study are not entitled to any Student Allowance payments for the week(s) they undertake that work. It is important that you discuss this with your learners.

For more information on allowance entitlements and paid practical work please see StudyLink.

For details on learners with unpaid fees see the funding conditions for the relevant year.