Coalition agreement: The initial financial hit students are taking to ...

National leader Christopher Luxon with NZ First leader Winston Peters and Act leader David Seymour. Photo / Mark Mitchell

Thousands of students planning to start university in 2025 will have to fund their first year of study following a coalition change to the fees-free scheme after New Zealand First leader Winston Peters dug his heels in.

Since 2018, eligible students have been able to apply to have the fees of the first year of their tertiary studies funded by the government.

However, following the three-way coalition negotiations between National, Act and NZ First, which culminated yesterday, that policy will change.

The fees-free policy change was one that Peters and NZ First had campaigned on in the lead-up to the General Election.

National caved on its plan to tax foreign buyers after NZ First objected but incoming Prime Minister Christopher Luxon told the Herald earlier other measures in the coalition agreements had resulted in some other savings.

“We are very confident we can deliver tax relief as we planned.”

These measures included moving the fees-free year for tertiary education from the first year of study to the third year.

The number of students who took shorter courses or dropped out by the third year meant fewer students would qualify for it, freeing up some money. No changes would be made before 2025.

It is likely to first affect students starting their final year of high school next year.

The fees-free initiative was a cornerstone of Labour’s 2017 election campaign and introduced under the Ardern government in January 2018.

It was meant to be expanded to cover the first three years, but this was suspended in 2020, largely due to the impact of Covid-19 and the need to reprioritise spending.

The fund is available to first-time tertiary students and covers one year of study or two years of work-based training up to $12,000.

In the first year of the policy, students saved $194.2 million in fees.

Since then, thousands of students have enrolled at university under the policy. In 2022, there were 42,760 students enrolled at tertiary institutions or people placed in industry training under the programme.

The scheme’s original intentions were to help people overcome economic barriers to higher education, while also growing the numbers of those enrolled. However, Herald reporting in January showed the proportion of students from wealthier backgrounds taking up the policy continued to grow.

Forty days after the election, National, Act and NZ First announced a coalition deal had been struck. Winston Peters and David Seymour will be co-Deputy Prime Ministers, doing half a term each. Peters will be Minister of Foreign Affairs and Seymour will be Minister for Regulation.