At today’s University Council meeting, chief finance officer Brian Trott’s paper will be discussed.
The government is allowing the university to increase all tuition fees by 6%, and Mr Trott recommends the university takes full advantage of this.
"The setting of tuition fees for 2026 comes during a challenging time for the university, as it continues to recover from the financial deficits of recent years and to return to a financial surplus that will enable future investment in strategic priorities."
Mr Trott’s paper said the university’s financial performance was being watched closely by the Tertiary Education Commission, which at present assessed it as a "medium" financial risk and was "eager to see the university regain its normal low-risk classification".
"Equally, it is important to acknowledge that this is a challenging time for students, who face a significant change to the government’s fees-free policies, as well as cost of living pressures."
The university stood to miss out on nearly $8 million in revenue next year if it did not hike the fees, because in rough terms, each 1% increase in domestic tuition fees for 2026 will generate $1.4m in revenue, Mr Trott estimated.
Should the university council pass the measures, it will be the second consecutive year it has hiked its fees by the maximum allowable 6%.
It comes at a time where the government has re-prioritised university funding, Mr Trott said.
"The government has taken a targeted approach to setting 2026 funding levels, with only selected disciplines receiving a funding rate boost for 2026.
"In addition, the government has confirmed that the time-limited 4% increase introduced in 2023 would cease on December 31, 2025.
Arts is not a targeted discipline and therefore receives no government funding rate increase in 2026.
"The cumulative effect of these rates not keeping pace with inflation are a significant contributor to the financial pressures being felt across the tertiary sector.
"From a 2018 pre-Covid base, CPI has increased by 30% to mid-2025, while equivalent fulltime students’ subsidies have increased by 19% and tuition fees by just over 14%.
"Projecting to 2026, cumulative CPI will have increased by 32%, EFTS subsidies by just under 21% (with the aggregate decrease for 2026), and — if the ability to increase fees by the maximum 6% is exercised — tuition fees by just over 26%.
"Viewed in this context, the 6% [tuition fee increase] allows the opportunity for a partial catch-up for previous years in which permitted fee increases were well below CPI."
It is proposed Otago’s undergraduate tuition fees next year will range from $7023 for commerce and teaching to $19,588 for medicine and dentistry.
Mr Trott said he imagined other universities will also increase their fees by 6% because of the present economic climate.
There is also a proposal on the table to raise compulsory student activity fees by 3.5% next year to $1193.
"Despite our efforts to minimise expenses without compromising service quality, the costs of providing these services to students continue to rise."
