Primary and secondary
State and state integrated schools are allocated funding from the Government on a per-student basis to fund the running of the school. Smaller schools receive additional funding due to the added fixed costs of running them compared to larger schools, and schools also receive funding based on the school's socio-economic decile rating, with low-decile schools (i.e. those in poorer areas) receiving more funds. They may also receive funds from other activities, such as hiring out school facilities outside school hours to outside groups. Schools also ask for a voluntary donation from parents, informally known as "school fees", to cover extra expenses not covered by the government funding. This may range from $40 per child up to $800 per child in high decile state schools, to over $4000 in state integrated schools. The payment of this fee varies widely according to how parents perceive the school. Typically parents will also outlay $500-$1000 per year for uniforms, field trips, social events, sporting equipment and stationery at state schools.
Most state integrated schools also charge "attendance dues", a compulsory fee paid to the school's proprietors to cover the cost of maintaining and upgrading school land and buildings. Unlike voluntary donations, attendance dues are not optional and parents are contractually and legally required to pay them, and schools can take action to collect these or cancel the enrollment of a student if they are not paid.
Private schools rely mainly on tuition fees paid to the school by the parents of the students, although some funding is provided by the government. As of 2013, private schools receives from the Government (exclusive of GST) $1013 for every Year 1 to 6 student, $1109 for every Year 7 and 8 student, $1420 for every Year 9 and 10 student, and $2156 for every Year 11 to 13 student. However, the government funding is more of a partial tax rebate, as the GST payable to the government on the tuition fees collected often exceeds the government funding received in turn.
Salaries and wages for teaching staff in state and state integrated schools are paid directly from the Ministry of Education to the employee, and are not paid out of a school's funding. The salaries are fixed nationwide, and are based on the teacher's qualifications, years of service and workload, with middle and senior management awarded extra pay through "units". In 1991, following the decentralisation of school administration (the "Tomorrow's Schools" reforms), there was an attempt to move the responsibilities of paying teachers' salaries from the ministry to each school's Board of Trustees, in which each board would receive a lump sum from the government for all costs, including the payment of salaries. Known as "Bulk Funding", the proposal met strong opposition from teachers and their unions, particularly the Post Primary Teachers' Association, and wildcat strike action occurred among teachers as some schools' boards of trustees gradually elected to move to the new system. Bulk Funding was eventually scrapped in July 2000.
Special needs students are entitled to Ongoing Resource Scheme (ORS) funding, which is used for facilitating the adaption of the curriculum to fit the student, funding of teacher aides and specialists, and procuring any special equipment required. There are three levels of funding based on the student's needs: very high, high or combined moderate. For example, a student who is totally blind or deaf is classified as very high needs, while a student who is partially sighted (6/36 or worse) or severely or profoundly deaf (71 dB loss or worse) is classified as high needs. ORS funding is permanent, so it continues until the student leaves school.
Tertiary education
Funding for tertiary education in New Zealand is through a combination of government subsidies and student fees. The government funds approved courses by a tuition grant based on the number of enrolled students in each course and the amount of study time each course requires. Courses are rated on an equivalent full-time Student (EFTS) basis. Students enrolled in courses can access Student Loans and Student Allowances to assist with fees and living costs.
Funding for Tertiary Institutions has been criticised recently due to high fees and funding not keeping pace with costs or inflation. Some also point out that high fees are leading to skills shortages in New Zealand as high costs discourage participation and graduating students seek well paying jobs off shore to pay for their student loans debts. As a result, education funding has been undergoing an ongoing review in recent years.
Students
Most tertiary education students rely on some form of state funding to pay for their tuition and living expenses. Mostly, students rely on state provided student loans and allowances. Secondary school students sitting the state run examinations are awarded scholarships, depending on their results, that assist in paying some tuition fees. Universities and other funders also provide scholarships or funding grants to promising students, though mostly at a postgraduate level. Some employers will also assist their employees to study (full-time or part-time) towards a qualification that is relevant to their work. People who receive state welfare benefits and are retraining, or returning to the workforce after raising children, may be eligible for supplementary assistance, however students already in full or part-time study are not eligible for most state welfare benefits.
Student allowances
Student Allowances, which are non-refundable grants to students of limited means, are means tested and the weekly amount granted depends on residential and citizenship qualifications, age, location, marital status, dependent children as well as personal, spousal or parental income. The allowance is intended for living expenses, so most students receiving an allowance will still need a student loan to pay for their tuition fees.
Student loans
The Student Loan Scheme is available to all New Zealand citizens and permanent residents. It covers course fees, course related expenses, and can also provide a weekly living allowance for full-time students. The loan must be repaid at a rate dependent on income and repayments are normally recovered via the income tax system by wage deductions. Low income earners and students in full-time study can have the interest on their loans written off.
On 26 July 2005, the Labour Party announced that they would abolish interest on Student Loans, if re-elected at the September election, which they were. From April 2006, the interest component on Student Loans was abolished for students who live in New Zealand. This has eased pressure on the government from current students. However, it has caused resentment from past students many of whom have accumulated large interests amounts in the years 1992-2006.