Degree apprenticeships in New Zealand: the double cake
Having your cake and eating it too: a degree with a paycheque for students; a smaller bill for the state.
New Zealand finances higher education in many ways. Providers receive tuition subsidies. Students receive income‑tested allowances. Most take on income‑contingent loans, a portion of which the state ultimately writes off.
All this in a system with little fiscal headroom to boost institutional funding, and one whose campus‑heavy cost base leaves providers exposed to the cycle: when jobs are plentiful, demand for on‑campus study ebbs while work‑based learning swells, prompting periodic restructuring and increasingly often bailouts.
Degree apprenticeships save the government around $4,700 per student per year
Degree apprenticeships offer a way out of this dynamic. A degree apprenticeship is an “earn‑and‑learn” pathway in which a student is employed from day one, completes a bachelor’s or higher degree through structured, work‑integrated study and assessment, and progresses on the employer’s payroll.
Wages replace living‑cost support; workplace learning replaces a chunk of campus time; employers get a pipeline of talent tied to real jobs.
Every year, the government currently spends around $10,000 per student on tuition subsidies and makes about $8,000 available to compensate for their low incomes and lack of funds to pay student fees or living costs.
Degree apprenticeships help the government avoid some of these costs. People in full-time employment can’t access student allowances and generally don’t require living cost loans, and employers typically pay their apprentices’ tuition fees.
The sums involved aren’t trivial. Student loan write-offs averaged $2,303 per student in 2024, and student allowances and accommodation benefits averaged $2,379 per student in 2024 (see Counting the Double Cake).
These figures mean that each degree apprentice yields up to NZ$4,682 less in annual student‑support costs than a conventional student. That is a 26% cost savings compared to an on-campus student. No wonder the New Zealand Treasury favours work-based learning.
Scale that to 10,000 apprentices and the saving comes to NZ$187 million over four years. These are resources that can relieve fiscal pressure and give the government more options.
It’s not all about the Benjamins either
Nor is the benefit purely budgetary. For providers, degree apprenticeships are a product‑diversification strategy.
By shifting a bigger slice of provision into employment settings, institutions smooth revenues across the cycle, reduce exposure to abrupt swings in full‑time on‑campus demand, and deepen ties with industries that ultimately hire their graduates.
For the government, that stability reduces the likelihood and the political annoyance of future bailouts.
What to do with these savings?
What to do with the headroom? Stimulate demand for degree apprenticeships. Degree apprenticeships can be expensive to set up initially, incur higher coordination costs than other programmes, and rely more on employers’ capacity to train.
These savings can be used to seed new programmes in occupations with skill shortages and fund the coordination and assessment capacity that makes earn‑and‑learn tick. Each dollar crowds in private investment as employers see the benefits of higher staff retention and better-skilled staff, and accelerates the uptake of the model.
Do this, and New Zealand can have its degree and eat it too: more people studying towards higher‑level qualifications, more skilled people, higher tax revenues, less deadweight transfers through loans and allowances, and a tertiary sector better hedged against the business cycle
Perhaps this is what an investment approach in tertiary education really looks like.
| Counting the Double Cake | |
|---|---|
| Learner Types | |
| All domestic learners (MoE, 2025) | 350,640 |
| Less Workplace-based learning learners (MoE, 2025a) | 114,395 |
| Non-workplace-based learners | 236,245 |
| Category | 2024 (no.) |
| Non workplace-based learners | 236,245 |
| Student Support | |
| Total Student Allowances and Accommodation Benefit payments (MSD, 2025) | $562,000,000 |
| Average Student Allowances and Accommodation Benefit per student | $2,379 |
| Student Loan | |
| Initial Fair Value Write-Down Relating to Student Loans (IRD, 2025) | $544,000,000 |
| Average write-down cost per student | $2,303 |
| Savings to government per year | $4,682 |
| Saving over four years per apprentice | $18,726 |
Sources: (MoE, 2025), (MoE, 2025a), (MSD,2025), (IRD, 2025)