Tertiary education groups say institutions will start cheating if the Government keeps punishing them when too few students pass their courses.
This year, nine institutions lost $1.8 million because they did not meet minimum-completion rates, and 35 are at risk of losing funding next year.
Radio New Zealand's education correspondent says the required completion rates go up each year, and last year ranged from 45% at polytechnics and wananga, to an average of 70% for private institutions.
The Tertiary Education Union says the benchmarks are crude and will prompt institutions to pass students who should fail.
The Association of Private Education Providers agrees institutions might be tempted to take short-cuts if the thresholds go too high.
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