On this page:

• Funding mechanism
• Funding calculation
• Funding for re-enrolments
• Over-delivery and under-delivery
• Funding wash-ups
• Subcontracting
• Restrictions on fees
• Student Allowance and Student Loan Schemes

Funding mechanism

Each year the Minister responsible for tertiary education issues the DQ1-2 funding mechanism. It sets out the purpose of the fund and gives authority to the Tertiary Education Commission (TEC) to administer the funding.

Funding mechanisms

Funding is agreed through a tertiary education organisation's (TEO's) Investment Plan. For more information see Guidance to develop your Investment Plan.

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 specified in their funding approval documentation.

The maximum amount of DQ1-2 funding available is set through the Government’s annual budget process. We determine the appropriate amount of DQ1-2 funding for a TEO through the annual investment process and in-year additional funding requests (if available).

Funding allocation and payments

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

DQ-1-2 funding is paid in equal monthly instalments.

For information on the calculation of indicative allocations, see the methodology from the relevant year at Indicative allocations by year.

For more details regarding your TEO's 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.

Your TEO will submit the above information in the 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 courses. The rate that your qualification is funded at is determined by 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 classification
• classification funding rates, and
• learner enrolments. 

Example

Funding rates

For information on funding rates for the relevant year, including DQ1-2 funding rates, please refer to the spreadsheet file in Funding rates by year.

Note: At DQ1-2 level, a funding rate is applied to each qualification, not the individual courses. The rate that your qualification is funded at will be determined by the funding category that the majority of your delivery sits under.

Funding for re-enrolments 

Re-enrolling a DQ1-2 learner

If a DQ1-2 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.

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) 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 (not an EFTS volume). A TEO is expected to manage its enrolments effectively and in accordance with its Investment Plan. 

We will consider the level 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 TEO’s funding approval letter. This means that we will not pay for any teaching or assessment your TEO over-delivers.

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 any TEO delivers less than 99% of its DQ1-2 funded provision during the year, we will recover funding (see below for recovery details). 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, see the methodology and technical specifications from the relevant 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:

• the TEO has not achieved, or is not achieving, an outcome anticipated in its Plan for a tertiary education programme or activity (in relation to funding given under section 425 of the Act), when measured against performance indicators
• 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 us or the Ministry of Education under section 425 of the Act.

If your TEO has its funding approval revoked in accordance with clause 16 of Schedule 18 of the Act, the unspent portion of funding must be repaid to us. For conditions, see the DQ1-2 funding conditions for the relevant year. 

We may arrange to offset the amount against any funding payable to your TEO.

Clause 16 of Schedule 18 of the Education and Training Act 2020 – New Zealand Legislation

Section 425 of the Education and Training Act 2020 – New Zealand Legislation 

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 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.

Agreement to subcontract

Subcontracting can be agreed to within a TEO’s Investment Plan. The subcontracting specified in the Plan is permitted for the period of the Plan. If the Plan expires then you need to obtain our approval again.

You must not subcontract any DQ1-2 funded activities without prior written approval from NZQA (as your external quality assurance body), and without our prior written consent.

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

You can contact our Customer Contact Group, phone 0800 601 301 or email customerservice@tec.govt.nz, at any time to discuss proposed subcontracting.

Restrictions on fees

TEOs that deliver DQ1-2 funded provision must not charge learners a fee, apart from a student services fee. 

For further information about restrictions on fees, please see the DQ1-2 funding conditions for the relevant year. 

Student Allowance and Student Loan Schemes

A qualification 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 qualification 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 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 qualification is 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 Schemes 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 
• runs for fewer than 32 weeks but has an EFTS value of between 0.25 and 0.3 EFTS.

Micro-credentials

Micro-credentials are not eligible for either the Student Allowance or Student Loan Schemes.

Loan entry threshold

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

A qualification that is not deemed to be 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.

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.

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