The policy is part of Labour's Working Futures Plan, which was announced during Mr Little's state of the nation address in Rotorua yesterday.
• Comment: Free education an interesting discussion
‘‘The nature of work is changing rapidly and our education system must keep up if we are to seize the opportunities of the future,'' Mr Little said.
‘‘Our Working Futures Plan will mean that no matter what path someone wants to take after school, be it university or an apprenticeship, they will be able to get the skills they need to succeed without being shackled with years of debt.''
He said the three years' education would be available throughout a person's lifetime, so it could be used for retraining or if someone changed career part-way through their working life.
Tertiary Education Union president Sandra Grey described the proposal an ‘‘exciting investment in hope''.
She said it finally recognised tertiary education as an investment for the country, rather than a burden.
Otago Polytechnic chief executive Phil Ker said at first glance, he had some reservations about the policy, but was supportive.
He questioned whether the policy was genuinely affordable for the Government/taxpayer, and he was concerned many young people might take three years of free education for granted.
However, he believed the policy made sense.
‘‘It's based on quite sound reasoning, which is around the rapidly changing technology in particular, and the rendering obsolete of jobs, and the need for people to retrain.
‘‘Unfortunately, the cost of that retraining is very high. So it seems to me that the policy makes some sense, in terms of making it easy for a workforce to up-skill.''
Universities New Zealand executive director Chris Whelan saw the announcement as ‘‘a hugely positive step for overcoming barriers faced by a number of potential students''.
‘‘We know that loans put off some people from entering study - even when they are interest-free.
‘‘This is particularly the case for people from lower socio-economic backgrounds who are not sure about the returns from an education.
‘‘It's also the case for people taking time out of the workforce to re-skill. These people often already have mortgages and other financial commitments and are reluctant or unable to take on more debt,'' Mr Whelan said.
However, he said the announcement failed to deal with the issue of long-term under-funding in New Zealand's universities.
Without more institutional funding the policy would just hasten the decline in the quality of the university system, he said.
A University of Otago spokeswoman said there was a great deal to consider in the policy, and wider consultation within the university would be required before responding.
Tertiary Education Minister Steven Joyce said the Labour Party wanted to take more than a billion dollars a year more from taxpayers to achieve absolutely nothing.
