Staff at the agricultural training campus Telford have been told their pay will be suspended from Friday.
The on-farm campus near Balclutha is part of the Taratahi Institute of Agriculture, which was placed in interim liquidation late last year.
Tertiary Education Union Otago organiser Kris Smith said staff at Telford received a letter this week informing them their pay was about to be suspended.
"It's been absolutely devastating for them and I don't think any of them knew how bad things were financially."
She said the latest news had been absolutely devastating for staff already reeling from the liquidation decision.
Ms Smith said a decision about Telford's future needed to be made quickly so enrolments could be taken for the coming year.
She has called on the government to forgive the debts against the campus and allow it to be taken over by another institution.