The Otago Polytechnic is increasing tuition fees for 2012 by 4 % - the maximum allowed - for the second year in a row, while the students' association has warned this will lead to a drop in enrolments.
The polytechnic council approved the increase at its meeting in Cromwell yesterday after a discussion about the unfairness of Government funding cuts for the coming year.
The Government inflation adjustment is set at 2% for degree courses only in the coming year, rather than for all courses.
Degree courses make up about half of the courses offered at the polytechnic, so that left a shortfall in funding, Otago Polytechnic chief executive Phil Ker said.
Inflation was forecast at 3% for 2012, while the Government inflation adjustment was set at 2%.
Other costs were rising. The institute's insurance premium had also doubled because of the Christchurch earthquakes, adding a further $140,000 to find, he said.
As well, from July 2012, polytechnics had to fund the employer contribution for KiwiSaver.
Polytechnic chief operating officer Philip Cullen said it was always a challenge for any tertiary institution to balance financial need with the impact on students.
"My perspective is we regrettably have no choice," he said about the proposed increase.
In a submission from the Otago Polytechnic Students' Association on the fees, association president Michelle Fidow and vice-president Rebecca Hohaia said it was unfair students were bearing the brunt of Government under-funding for tertiary education institutes.
"Students are essentially a soft target - if you want or need to study you have no choice other than to pay increased fees," they said.
The polytechnic had increased fees by the maximum amount allowable of 4% for the 2011 year and the association recommended no increase in fees for the coming year to "place importance on the future of New Zealand by allowing our graduates to live with a lower amount of debt . . ."
A sustained raising of tuition fees must eventually result in fewer enrolments, the association's submission said.
Council chairwoman Kathy Grant said she had sympathy with the views expressed by the student association, but the polytechnic had little option but to increase fees.
