Announced in the Budget, the annual maximum fee movement in 2016 would be 3%, subject to consultation. It reflected low inflation and would help students, Tertiary Education, Skills and Employment Minister Steven Joyce said.
''This regulates the amount by which tertiary education providers can increase their fees each year, and has previously been set at 4%.''
But in a joint release the New Zealand Union of Students' Associations and the Tertiary Education Union said lowering the annual increases meant universities and polytechnics would be underfunded.
The Government needed to invest more money to reduce pressures on institutions, TEU national president Sandra Grey said.
She said the Budget had cut tuition funding to polytechnics by $1 million.
NZUSA president Rory McCourt criticised a freeze on the parental income threshold on student allowances, which meant fewer students would be eligible.
''Fees will increase fractionally more slowly, but more students will clock up bigger debts, getting educations from institutions with less money to spend on quality.''
Mr Joyce said the Budget provided another $112.3 million operating funding over four years, and $1 million capital funding.
''We are continuing to address the relative under-funding of higher-cost disciplines such as science and agriculture to ensure that these economically important and research-rich areas attract more investment from providers to deliver more of the skills and knowledge New Zealand needs to drive economic growth.''
The new spending came from funding made available by reduced demand for tertiary education, ''reprioritisation'' within tertiary education, and reduced student support.
Universities New Zealand chairwoman Prof Harlene Hayne, who is also University of Otago vice-chancellor, welcomed the extra investment in the sector, and said vice-chancellors looked forward to participating in the fee increase consultation process.
New Zealand Medical Students' Association president Elizabeth Berryman, of Dunedin, said in a press release medical students were still disappointed with the seven-year time restriction on student loans announced in 2010.
The policy begins to affect some students in November this year.
''The Government spends thousands of dollars each year on training doctors and for them to undercut their own investment so severely makes no sense at all,'' Ms Berryman said.
Tertiary education
• Reduced cap for student fees
• Student allowance parental income threshold freeze until 2019
• $112.3 million over four years additional operating funding
• Tertiary funding ''reprioritised'' to pay for new spending
• $5.9 million over four years for trainee medical intern grants
