Universities want a big increase in equity funding for struggling students, and say money should be targeted based on students' NCEA results, rather than race or disability.
The government's review of universities asked how to tackle barriers to student success.
Universities New Zealand's submission said students who passed 90 percent of their first-year courses were most likely to be successful at university.
"UNZ did extensive work in this area in 2018 and 2019 and again in 2023. We know from that work that NCEA grades predict about 89 percent of the academic performance of students at university," the submission said.
"When students are sorted into quintiles by their NCEA results, the bottom (fifth) quintile is disproportionately at risk of not gaining the necessary 90 percent of first year credits, followed by the second bottom (fourth) quintile."
The report said equity funding should therefore be targeted to students with the worst school grades.
"We suggest equity funding would deliver a better return to the country if it was targeted by quintile around $5000 for first year students in the lowest quintile, and around $1200 for first year students in the fourth quintile. This would be sufficient to ensure adequate academic support for the students who need it."
That would require a big increase in equity funding, which currently totalled $16.9 million a year with payments of $355 a year for each Māori and Pacific student in a degree programme, and $31.73 for each learner with disabilities.
Universities New Zealand said Māori and Pacific students were over-represented in the bottom two quintile groups for NCEA achievement among first-year students.
The submission also called for an increase in funding for student mental health.
"A decade ago, 9.5 percent of university students were accessing mental health services. By 2021 this reached 13.8 percent
with a growing number of students presenting with serious and acute challenges.
"The sector is not resourced for this, and the public health system is increasingly also struggling to take on student referrals.
"Additional dedicated ring-fenced funding for mental health and wellbeing services would take pressure off universities and potentially reduce costs to the public by improving the overall resilience and wellbeing of graduates entering the workforce."
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