The Tertiary Education Commission says the Developers Institute was over-funded in several instances since 2021 and has decided to end funding immediately
Students at an online tech school have been left scrambling after learning by email from liquidators that their courses are ending.
Northland-based Developers Institute staff were also informed they had lost their jobs in a meeting a few hours earlier.
The insolvency was a result of the Tertiary Education Commission deciding to claw back about $1.3 million in funds it claimed to be owed.
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This comes after the commission refused to hold off on $107.7m in clawbacks to Victoria, Massey, AUT and Otago universities, as well as polytechnic Te Pūkenga. Lower enrolments in universities this year meant that the commission would take back some of what it had lent out based on projected enrolments.
The commission says the Developers Institute has been over-funded several times since 2021. Because of the accrued debt, the commission decided to cease continued funding immediately. Without the funding, the Developers Institute could no longer afford to operate.
The closure came as a complete surprise to students, some of whom had only a semester remaining of their degree, and some had just enrolled. After receiving the email on the Tuesday they were left with many unanswered questions. A meeting was organised for the next day, but was then postponed until Friday.
The meeting was carried out online and included representatives of the Tertiary Education Commission, the New Zealand Qualifications Authority, Public Trust and the liquidators, BDO. No officials of the institute were present.
In the meeting one student asked why the commission couldn’t have held off on the withdrawal of funds, to save some students the disruption.
“First-off I asked why was an arrangement not made to fund Developers Institute for students who had 1-2 terms left, and then do a controlled shut down,” he says.
Level six developer Chelsea Ferguson recalled one of the commission’s representatives saying: “We had to cut funding from Developers Institute and if they couldn’t run without our funding then, that’s their problem not our problem, basically.”
Regarding the possibility of a delayed retraction of funds, Gillian Dudgeon, the commission's deputy chief executive, says: “The Tertiary Education Commission is required by law to recover overpaid funding."
Education organisations agree through their funding conditions to repay the Commission if learner enrolments are well below expectations, students don’t complete courses, or the teaching is different from what was funded, she adds.
Some students were using Mac computers rented by the school and who had each paid a bond of $300. “Which, for me, is like a roof over my head,” Ferguson said.
"They’ve failed us and they’ve failed their teaching team on that, because the teaching team found out the same day as us" – student
Because of the unprotected way the bonds were kept by the institute (not in a trust account), they were wiped by the liquidators. BDO told the students they probably wouldn't get their money back.
Ferguson says the liquidators used complicated jargon in the meeting, which was hard for students on the call to understand.
“When it started to sink in, what kind of situation we were in, after it came out that we weren’t getting our money from bonds, people started visibly crying,” she says. “We’d just had the rug pulled out from underneath us.”
Another student, who only had a term of study left, is disappointed by the NZ Qualifications Authority’s lack of aid in finding another course to cross credit to. She says it gave a list of four options that had similar degree titles, but were not relevant to what they had been studying at the institute. They were then left by the qualifications authority to contact the providers themselves.
In response to the alleged inadequacy of the options provided, authority deputy chief executive Eve McMahon says it works to identify alternative providers offering the same qualifications in a similar way, "although differences between providers’ programmes mean the transition may not be seamless".
McMahon says it's the students’ responsibility to select and contact the alternate provider. “Students should talk to providers to make their own choice about which programme will best suit their individual needs.”
The students were given three weeks by Studylink to find a new provider before their student benefits were cut off.
"That’s how a lot of us are affording to live right now," the student says. "They haven’t completely cut us of off but they’re not being that forthcoming with information on how they can help us. A lot of us are flailing around like fish out of water, to be honest with you."
The student also says it's the failure of the operators of the Developers Institute, George Norris and Ruth Green-Cole, to not warn the staff or students about the liquidation.
"They’ve failed us and they’ve failed their teaching team on that, because the teaching team found out the same day as us," the student says. "That’s one thing I think the institute could have done differently. It’s quite frustrating, how they went about it."
Green-Cole says she and Norris are unwilling to discuss the school’s closing because the situation is still too “sensitive”, and they would prefer to let the liquidators speak for them.
Dudgeon, of the Tertiary Education Commission, says it was told by the Developers Institute that another financier pulled its funding. Dudgeon also says the commission had given the appropriate amount of funding for those enrolled for the year.
“It should be noted that Developers Institute had already been fully paid for the level of teaching it advised us it was expecting to deliver in 2023.”
Education Minister Jan Tinetti says the primary responsibility for pastoral care of students lies with the tertiary education organisation. “This includes operating in a financially sustainable manner and keeping students informed of events that might affect the learning they are paying for."
She says the Tertiary Education Commission, as a government entity using taxpayers’ money, has the responsibility to make sure its funds are being used appropriately and lawfully.
“The management of funding to tertiary education organisations is an operational matter for the commission, and they have a legal obligation to recover payments of taxpayer money for teaching that has not been delivered."
