Te Whanau o Hato Petera Trust and the Catholic Diocese of Auckland have confirmed they will close all the boarding facilities at Hato Petera College next year.
Earlier this month the Māori coeducational school, on Aucklands' North Shore, suddenly closed its junior boarding wing.
Some parents were disappointed and angry at the timing of the decision and believed the move would lead to the school's closure.
Claire Morgan's daughter is in her second year at Hato Petera. She said closing the hostel was a threat to her daughter's future.
"It potentially threatens the ability of my daughter to attend the college. My options are either to bring her back here to Kaikohe, which I don't want to do, or find alternative accommodation or another boarding school," Ms Morgan said.
She said the closure has come at the worst possible time becuase it was exam time and students were on "an emotional rollercoaster".
Ms Morgan also said the school couldn't function without students, "and if you take away the boarding, you're effectively trying to shut the school down".
Another parent, who didn't want to be named, said her daughter had a scholarship that paid her accommodation if she attended a Māori boarding school, and the closure had harmed her daughter's learning.
Not financially viable - Trust
Te Whanau o Hato Petera Trust said it wasn't financially viable to bring the boarding facility up to standard.
In a statement, it said it decided to close because "some of the buildings are no longer suitable to accommodate students" and would require "significant work and investment".
The Catholic Diocese of Auckland said the decision to close the boarding facility was not taken lightly and was made in the best interests of the students. It said the school would continue to operate as a day school.
In a statement, the diocese also the trust deed had been continually breached over its term, which was why it had not renewed the lease for a further 20 years, but offered only a five-year rolling lease arrangement in 2014.
"The lease agreement was only formalised when Dr Lance O'Sullivan took over as co-chair of the Trust. If this had not occurred, the Ministry of Education hostel licence would have been terminated."
The diocese also said the trust had "serious financial issues" which would only worsen due to the financial costs associated with the facilities.
"We have only been able to operate some of the hostels this term because of financial assistance from the Catholic Diocese of Auckland."
Te Whanau o Hato Petera Trust said the current operating model for the hostel did not adequately meet the needs of the college's students.
It is holding a hui on Sunday to give whanau fuller details about the decision to close the hostel.