Universities and polytechnics have got little help from this year's Budget, says theTertiary Education Union, and student unions say it does nothing to help struggling students.
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The Budget included $123 million a year for increased subsidies for some degree courses and for most sub-degree programmes.
But the union said that would not make much difference because costs are rising fast and many courses have had no subsidy increases for several years.
Tertiary Education Union president Sandra Grey said the increases to government subsidies would not make much difference.
"It is absolutely minimal - it won't be anything in real terms. We know that overall to the sector there's a drop - there's been a moving around of funding.
"So we've got kind of a robbing one area to pay another to allow for some - you know, good projects to happen - but overall the institutions have got more students and the funding really is going nowhere."
Ms Grey said the union's members are also worried the government is not doing more to help students.
Most tertiary institutions succeeding - Joyce
But Tertiary Education Minister Steven Joyce said the increases to tertiary subsidies in the Budget would have a positive impact on tertiary institutions.
He said the Budget's $400 million boost to science and research over the next four years would also benefit universities.
Mr Joyce said decreasing funding to overall tertiary education funding over the next two years was due to declining levels of special support to Canterbury and Lincoln universities as they recovered from the Canterbury earthquakes.
He said it was clear that most tertiary institutions were doing well.
"The test is in terms of the financial performance of the institutions and actually the bulk of institutions are coping well with the system and innovating and delivering better courses and with better results than previously," he said.
Mr Joyce said additional funding should go where the taxpayer would get better results.
Universities would like funding for more areas
Universities New Zealand, the organisation which represents the country's eight universities, welcomed the increased tertiary education and research funding.
Executive director Chris Whelan said the Budget gave $761 million over four years for science, research and tertiary education.
"This follows more than a decade where funding has declined in real terms for universities and where universities have struggled to maintain quality in teaching and research," he said.
However he said the Budget restricted any increases in subsidy rates for degree courses to a few subject areas, including science and agriculture, and Mr Whelan said other fields also needed increases.
"We would encourage the minister to consider increasing funding in other areas in future budgets. The increase in funding to the sciences is welcome, but funding to disciplines like law, the humanities, teaching and commerce have not increased since 2012 and universities are struggling to maintain quality in those areas."
Students associations 'appalled'
The Union of Students Associations said it was appalled the Budget did nothing for students struggling with financial hardship.
It said spending on student loans and allowances will fall in the next few years, even though students are finding it harder to make ends meet.
The union said a big part of the problem is that the government is not raising the level of parental income at which students become ineligible for an allowance to keep pace with inflation.