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The Minister for Tertiary Education and Skills says there will be more "pain" in the sector and concedes further job losses are inevitable, as the government pushes ahead with dismantling Te Pūkenga.
The government is consulting on a re-designed network for institutes of technology and polytechs, with some standing alone, while others will come under a federated structure, supplemented by the Open Polytechnic.
Penny Simmonds told Nine to Noon she expected five or six institutes would be ready to stand on their own by January, with three more to follow by the end of next year.
More job losses coming as Te Pukenga unwinds: Minister
She did not believe current students would notice a difference when their institute crossed over from Te Pūkenga to a standalone entity.
"They will still be engaging with the individual tutors, lecturers, industry organisations. They will still be associated with that entity that they are working with."
However, for institutions not deemed to be viable on their own, Simmonds said there would be a "blended delivery" model, meaning while they would still maintain a physical presence in their community, there would be more online courses and resources.
Simmonds said without Te Pūkenga, some institutions would be insolvent, and so would be expected to sell of some assets to bring down the debt.
"A number of institutions have got land or buildings that have been either under-utilised or unutilised, that need to be sold. They are a cost to them, they're still having to be repaired and maintained, so they do need to get rid of those under-utilised assets."
However, in other cases, Simmonds said the issue was with operating models.
"There are institutions where there will have to be further pain, there will have to be further work done. If you look at the Wellington institutions, they haven't run a surplus for over a decade. There is clearly an issue with their operating model, and there will have to be costs taken out," she said.
"We know that 70 percent of the costs are people. And so it's inevitable that there will have to be job losses in some areas."
Simmonds is sticking to her position that Te Pūkenga has $250m of debt, despite the organisation's annual report putting the debt figure at around $50m.
"Some of that is commercial debt to the bank, some of that is debt to the Crown, some of that is internal debt, but that is very clearly debt.
"Some polytechnics came into Te Pūkenga with reserves, as did some industry organisations. Those reserves were applied to some of the polytechnics that had commercial debt so that their interest was a little bit lower," she said.
"So it is still debt, [and] that money will have to go back to the polytechnics and the industry organisations that brought the money in."