On this page:

• Funding mechanism
• Funding calculation
• Funding for re-enrolments
• Over-delivery and under-delivery
• Suspending or revoking funding
• Subcontracting
• Restrictions on fees
• Student Allowance and Student Loan Schemes

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Funding mechanism

Each year, the responsible Minister(s) issue Funding mechanisms. These set out the purpose of each fund and give authority to us to administer the funding.

Funding mechanisms

An overall allocation of DQ1-2 funding for the year is set through the Government’s annual budget process. We then determine the appropriate amount of DQ1-2 funding for each tertiary education organisation (TEO) to receive, through the annual investment round process and in-year additional funding requests (if available). For more information on applying for funding in the annual investment round, see Investment Plan guidance, templates and timeframes.

All TEOs that receive DQ1-2 funding are required to comply with:

• Education and Training Act 2020 requirements, and
• funding conditions for the relevant year and any other conditions specified in their funding confirmation letter.

Funding allocation and payments

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

DQ1-2 funding is paid in equal monthly instalments.

For information about how we calculate indicative allocations, see the methodology for the relevant year at Indicative allocations for on-Plan funding, by year.

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

Funding calculation

We calculate the amount of funding a TEO has consumed using:

• the number of valid domestic student enrolments, measured in equivalent full-time students (EFTS), and
• the qualification and component courses that each valid domestic student is enrolled in.

You will submit the above information in the Single Data Return (SDR). 

We will then work out the rate that your delivery will be funded at. A funding rate is applied to each qualification, not the individual component courses. The rate your qualification is funded at is determined by the funding category that the majority of your delivery sits under. 

We use the following elements in the calculation:

• the metric (EFTS value)
• qualification or micro-credential delivery classification
• delivery classification funding rates (funding category), and
• learner enrolments. 

Example (rates may differ depending on year)

Step	Funding calculation	Example
1	Assign the qualification or micro-credential an EFTS value.	You deliver a Level 2 Certificate in Trades over one full-time academic year’s study that has a value of 0.5 EFTS.
2	Disaggregate the qualification into courses. Calculate the EFTS factor of each course.	It comprises four courses. The EFTS value of the qualification is disaggregated among the four courses. For this example, each course has an EFTS factor of 0.125 EFTS.
3	Assign the appropriate delivery classification and funding category to each course.	One course falls under delivery classification #05.2-General Education (funding category A1) while three courses fall under delivery classification #22 Trades (funding category P1).
4	We assign the qualification or micro-credential to one funding category, based on the category where the majority of EFTS are delivered.	The Certificate in Trades is categorised as a Trades qualification, as this is where 75% of the EFTS are delivered.
5	We apply the funding rate (per EFTS) for the qualification or micro-credential to each course.	The funding rate for this Trades qualification is $15,498 per EFTS (the rate per EFTS for the year in this example). You can find the funding rates per funding category at the bottom of the relevant year’s DQ1-2 funding mechanism.
6	Multiply the funding rate by the number of valid enrolments.	Forty learners enrol in the four courses in the qualification. The value of delivery in this qualification is $309,960 (excl. GST), ie, 0.5 x $15,498 x 40.

Funding rates

For information on DQ1-2 funding rates, please refer to the relevant year’s Funding rates by year.

Delivery at Level 1 is generally not eligible for the Trades funding rate.

Funding for re-enrolments 

Re-enrolling a DQ1-2 learner

If a learner requires further study to complete their qualification, they can only re-enrol in courses that they have not yet passed. This can include a course they have not yet studied, or a course they have studied and been assessed for, but that requires a re-sit (an unsuccessful completion).

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 enrolment. The TEO is funded 0.5 EFTS, for the 60 credits of courses the learner was enrolled in.

The TEO re-enrols the learner for a further period of study for the remaining 30 credits not yet achieved. The TEO will be funded 0.25 EFTS for the 30 credits the learner has been 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) as unsuccessful course completions, and 0.5 EFTS (60 credits) as successful course completions.

Over-delivery and under-delivery

We approve DQ1-2 funding as a total dollar value related to commitments TEOs make in their Investment Plans regarding their intended EFTS volume delivery. TEOs are expected to manage their enrolments effectively and in accordance with their Investment Plan.

We will consider the levels of delivery achieved when determining future funding allocations.

Over-delivery

We will only pay DQ1-2 funding up to the dollar amount agreed in your funding confirmation letter. This means that we will not pay for any teaching or assessment you over-deliver.

Under-delivery

For DQ1-2 funding, we have a “tolerance band” for under-delivery, which is currently set at 99% of each year’s funding. This is to acknowledge that the dollar value of enrolments may vary from the dollar value of the allocation approved by us.

If a TEO delivers less than 99% of its DQ1-2 funded provision during the year, we will recover funding. We may also reduce DQ1-2 funding to the level of actual delivery within the Investment Plan period, by amending the Plan, or revoking or suspending some funding.

Funding wash-ups

For information on the calculation of funding wash-ups for over- and under-delivery, see the methodology and technical specifications for the relevant year at 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 of a TEO’s funding given under section 425 of the Act if we are satisfied on reasonable grounds that they:

• have not achieved, or are not achieving, an outcome anticipated in their Plan for a programme or activity (in relation to funding given under the Act), when measured against performance indicators
• have not complied, or are not complying, with a condition on which funding has been given, or
• have not provided, or are not providing, adequate and timely information required by us or the Ministry of Education. 

If you have your funding approval revoked in accordance with clause 16 of Schedule 18 of the Act, you will need to repay the unspent portion of funding to us. Refer to the base funding conditions for the relevant year. 

We may arrange to offset the amount against any funding payable to your 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 does not include:

• teaching and learning activities contracted to individuals or non-TEO organisations (eg, 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 first aid provision)
• research activities or postgraduate research supervision, and
• learning that occurs within vocational placements, such a workplace placement or practicum.

You must not agree to subcontract any DQ1-2 funded activities without prior written approval from the New Zealand Qualifications Authority (NZQA) (as your external quality assurance body), and without our prior written consent. You need to apply for this consent as part of your Investment Plan.

If we approve your subcontracting arrangement, it will be for the term of your Plan. When your Plan expires, you will need to obtain our written consent again.

For conditions on subcontracting see the DQ1-2 funding conditions for the relevant year.

Restrictions on fees

You must not charge learners a fee for:

• tuition
• compulsory course costs
• examinations
• materials
• field trip costs associated with purchasing compulsory books or equipment
• any other charges associated with a course that is part of a qualification.

You may charge a student services fee, or a fee for a student identification card. 

For further information about your requirements if you collect student services fees please see the DQ1-2 funding conditions for the relevant year.

Student Allowance and Student Loan Schemes

A programme must be approved for DQ1-2 funding before a learner can access the Student Allowance and Student Loan Schemes. For more information on eligibility visit StudyLink.

Qualifications delivered full-time

We will only approve a DQ1-2 funded programme for learners to access the Student Allowance and Student Loan Schemes if it:

• is delivered full-time
• runs for a minimum of 12 weeks, and
• has an EFTS value of at least 0.3 EFTS.

Qualifications delivered part-time

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 is generally not eligible for the Student Allowance Scheme.

A DQ1-2 funded part-time programme leading to the award of a qualification will only be approved for access to the Student Loan Scheme if it 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 but has an EFTS value of between 0.25 and 0.3 EFTS.

Micro-credentials

If you have approval to deliver a micro-credential at Levels 1–2 on the New Zealand Qualifications and Credentials Framework (NZQCF) and wish to deliver it through DQ1-2 funding, it must be a minimum of 20 credits to be eligible. For more information, see Micro-credentials.

Micro-credentials are not eligible for either the Student Allowance or Student Loan Schemes as their EFTS values do not meet minimum requirements

Loan entry threshold

The loan entry threshold (LET) identifies the minimum EFTS value required for a learner's individual study programme for them to be deemed to be in full-time study. This informs their eligibility for the Student Allowance and Student Loan Schemes.

A qualification that is not deemed as full-time is not generally approved for access to the Student Allowance or Student Loan Schemes. However, it could still be eligible and funded through DQ1-2 funding. 

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

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

Length of enrolment (gross weeks)	Loan entry threshold (EFTS)
12	0.3
13	0.3
14	0.3
15	0.3
16	0.4
17	0.4
18	0.4
19	0.4
20	0.5
21	0.525
22	0.55
23	0.575
24	0.6
25	0.625
26	0.65
27	0.675
28	0.7
29	0.725
30	0.75
31	0.775
32–52	0.8
53 or more	1.0

Student allowances – paid practical work

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

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