Funding mechanism

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 is agreed to through a TEO’s Investment Plan (Plan). For more information see Guidance to develop your Plan.

A TEO that receives DQ1-2 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 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 Ngā Kete.

DQ1-2 funding is paid in equal monthly instalments.

For the calculation of indicative allocations see the methodology from the relevant year. The most recent information is at the top.

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

Funding rates

This page provides information on the DQ1-2 funding rates.

Funding calculation

We calculate a TEO’s consumed funding using:

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

To calculate a TEO’s consumed DQ1-2 funding, we use the following elements:

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

Example

Re-enrolling a DQ1-2 learner

Where a DQ1-2 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.

DQ1-2 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 (Plan). 

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

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 (see below for recovery details). We may also reduce DQ1-2 funding to the level of actual delivery within the Investment Plan period by making a significant Plan amendment, or by revoking or suspending some funding.

Over-delivery

We will only pay DQ1-2 funding up to the dollar amount agreed in the TEO’s funding approval letter. This means that we will not pay for over-delivery.

Funding wash-ups

For the calculation of funding wash-ups see the methodology and technical specifications from the relevant year. The most recent information is at the top.

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 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 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 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 organisations that are not TEOs (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 for 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 subcontract any DQ1-2 funded activities without the prior written approval of NZQA, where you are quality assured by NZQA, and without prior written consent from us.

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

Subcontracting can be agreed in two ways

Subcontracting can be agreed to within a TEO’s Investment Plan (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 to outside of a Plan by seeking our approval in writing. Again, the subcontracting specified is permitted for the period agreed with us.

TEOs can contact us at any time to discuss proposed subcontracting.

Restrictions on fees

TEOs that deliver DQ1-2 funded provision must not charge learners a fee unless it is the 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 payments

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 learner access to 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 learner access to the Student Allowance Scheme.

For a DQ1-2 funded part-time programme leading to the award of a qualification, we will only approve access to the 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 the Student Allowance and Student Loan Schemes access.

Loan entry threshold

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 the Student Allowance and Student Loan Schemes. A qualification that is not deemed to be full-time (ie, not approved for access to the Student Allowance or the Student Loan Schemes) can nevertheless be funded through DQ1-2 funding. 

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.

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 who 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 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.