The Full Cost of University in 2026
01 Nov, 2026
Well, that went quickly! Just like that, the daughter we dropped off at Otago University in February is about to finish her last exam and head home to Alexandra for the summer. While it will be wonderful to have her home, there goes my tidy house! She will work full-time once the Central Otago cherry season begins, but if any locals need a willing worker in the meantime, let me know!
From what I can work out (she is a teen, so light on details), she has had a very good year, and I'm proud of how she has managed the transition from home to university and a whole new life. Although her final exam results are still some time away, she has done well academically, adjusted to living away from home, and found her feet socially too, making a great bunch of friends along the way.
Given all the talk about the merits, or lack of, of tertiary education, and given that she has no interest in being a tradie, I thought I'd break down the actual costs of a university education for other young people considering this very valid route towards a future career.
The history so far
Back in January, just before our daughter left home for her first year at Otago University, I wrote: Debt Free at 18: The Money Systems We Put in Place Years Before University
Her financial preparation wasn't a crash course at 18, but the result of years of conversations about money, building the habit of investing part of everything she earned, learning to budget using PocketSmith, and taking full control of her own bank accounts and investments. Together, we roughly mapped out how she would cover her university costs using income from holiday work, scholarships, savings, a small withdrawal from her investments for spending money, and financial support from Jonny and me to cover any shortfall.
Our goal was for her to understand what life costs, take responsibility for managing her own money, and get through university without student debt.
Now that her first year is almost behind her, how has it all worked out?
Pretty good, I'd say. Her student loan remains $0.
Before she left home, I taught her to manage her money using the online budgeting app PocketSmith, which helped her move from managing the relatively small income and expenses of a school kid to the increasingly complex finances of a tertiary student. She has managed every dollar spent (and earned), from paying her accommodation throughout the year to covering course costs, university fees and all the personal expenses that come with living away from home.
If you are new around here, we are adamant that, to the best of her ability, she completes her studies without taking on a student loan. I want her to learn to manage money, not debt. Tertiary study was always an option, so as a whānau of three, we have spent years financially planning for that eventuality. I see too many 18-year-olds stumble into student debt without fully understanding how it might affect them later in life, and I knew she could potentially avoid that. Don't get me wrong, our interest-free student loan system here in Aotearoa certainly has its place, but to my mind, as a last resort, not a first.
How much did 2026 cost?
In PocketSmith, I selected the 'rolling year' date range (October 2025 to October 2026), as it captured all transactions, including the deposits she paid back in 2025. At her request, I'm not sharing which hall she went to or the papers she took (she has studied Psychology and Law), but she was happy for me to share her costs.
Total Hall of Residence cost: $22,490
In October, she paid two 'activity fees' of $379 and $641. Throughout the year, her hall of residence put on a range of activities, from BBQs to balls, to entertain all the young people living there.
She stayed in the hall from mid-February to early November, and accommodation cost $21,470 for a standard room. What do you get for that? A home for eight and a half months, hundreds of new friends, three meals a day, a laundry room, communal social areas and study spaces. Plus, the staff offered all sorts of support throughout the year. She has had a really positive hall experience.
In February, before moving in, she paid a deposit of $10,994. She paid the remaining $10,476 in weekly instalments of $291 for 36 weeks, with her final payment on 28 October, her last week at university for 2026. We could have chosen other payment options, but this worked well for her.
How did she pay for her accommodation without borrowing?
In 2025, she applied for many scholarships and received a $5,000 one from Otago University, which was applied to her accommodation deposit. She covered the remainder with savings she built up from working while at school and during the summer holidays, along with financial support from Jonny and me.
Total cost of university fees and course expenses: $11,366
Her university fees came to $11,000, with the remaining $366 covering textbooks and sundry expenses such as printing. To keep costs down, she borrowed textbooks from the library when she could, instead of buying them.
How did she pay for her fees and course costs without borrowing?
She paid these in full at the start of the year, except for an additional paper she picked up in her second semester, which she paid for at the time.
She was fortunate to receive a $2,500 scholarship towards these costs, and she paid the remainder from savings, with some financial help from us too.
General expenses: $2,338
She had the following PocketSmith categories for her general expenses: Stuff, Clothes, Gifts, Food, Beauty, Health and Spotify. We paid for her phone and internet plan, and she didn't have a car. But most of her spending went to one category in particular: FUN.
Good for her!
PocketSmith Dashboard showing her spending categories.
The point of leaving home and going to university is to stand on your own two feet, learn something, and have a good time while you do it!
How did she pay for her general expenses?
She funded these entirely by selling $3,000 of her investments, roughly 5% of her total investment portfolio (KiwiSaver and a Smart TWF ETF), which was worth around $62,000 at the start of 2026.
She put this money into a bank account and 'paid herself' by transferring $65 a week to her EFTPOS account. She does not use a credit card.
Throughout the year, whenever she earned or received money (from work, birthdays, or koha), she continued to invest a portion of it. We've shown her that, no matter your income, investing even a small portion of every dollar in the share market gradually builds an asset that can grow and provide future income. She has seen this come to life.
Her investments have now grown to around $71,000, almost entirely thanks to share market growth. Next year, she plans to sell another small percentage to fund her general expenses. It's an unconventional use of the '4% Rule', but so far, it's working for her.
Total cost of university and life for 2026: $36,194
Freaking OUCH! But facts are facts. For our 18-year-old, this is what life costs.
This represents her university and life-related spending from October 2025 to October 2026, including the costs paid before she even arrived in Dunedin. By far, the biggest expense has been accommodation, followed by university fees, and then her general living expenses, which I think she has done an excellent job of keeping low, budgeting for, tracking and keeping in check.
We've had some great conversations throughout the year about money, and I'm so thankful that she knows she can turn to me with any questions, which she does.
Largely, though, we've stepped back and let her manage it all. Micromanagers, we are not!
As she finishes up the year, she still has a little money in the bank, plus an untouched emergency fund of $500. She has also already paid the $600 bond for her 2027 Dunedin flat.
We've paid for all of this as a team of three. From the beginning, we told her that if she put in the mahi, we would cover the shortfall, and that's exactly what we've done.
She is a conscientious student who gets good grades and has taken any work offered throughout the year. But we all knew her income would never be enough to cover such large outgoings. Without our help, she would undoubtedly have needed a student loan, and she knows she's in a fortunate position because we can support her.
How have Jonny and I afforded to support her?
On our side of the ledger, Jonny and I have budgeted to make up the difference. Since she moved out, some of our costs have decreased (food and hot water, to name just two), and we've made it work while keeping our own financial goals on track.
From October last year, as our budget allowed, we began making weekly payments of varying amounts into her bank account, where she kept her university savings. She let this build up so that she had money available when the big bills came due. I always wanted her to pay all her own bills from her own bank account, so she got used to it.
Then, from January 2026, we settled into paying her $300 a week, and I encouraged her to consider this ‘income’, again, so she got used to that concept. Throughout the year, she has budgeted well with that money and managed to cover all her outgoings.
In total, so far, we've contributed $17,500 towards her education and will continue this $300 weekly payment for the foreseeable future, including throughout the holidays, so it can build up to cover the big bills that will come her way when the new academic year begins. We may adjust that amount up or down in 2027.
As she finishes university and comes home for the summer to work, earning an estimated $5,000 - $7,000, she will add that income (minus the portion that she invests) to her savings, putting her in a good position heading into the 2027 academic year.
From 1 January, she must pay $200 a week in rent for her room in her six-bedroom flat, even though she'll still be living here in Alexandra. There is no way around this, as landlords insist on a 12-month contract. She's also estimating her academic course costs will be higher than last year due to fee increases.
Flatting is cheaper than living in a Hall of Residence, so her overall costs should be lower in 2027. However, with the government's decision to abolish Fees Free without warning, she has effectively been handed an additional expense of around $11,000 in her third year.
New expenses will also include groceries, electricity and internet. She will likely take her small car to Dunedin with her next year too, bringing all the additional costs that come with that.
This is budgeting. Costs change, and you have to adapt.
What has she learned about money management in the last year?
One of her biggest observations has been how easy it is to spend money! Ah, yep! Course fees are expensive enough, but there are also all the extra course-related things you need that you hadn't necessarily factored into your budget.
It's been interesting watching her use PocketSmith. I helped her set it up, and she's at best a basic user. But when it comes to budgeting, it doesn't matter how you do it, just that you do it!
Thanks to the auto-categorisation features, most of the work is done for her, and I tidy things up when she comes home from time to time. So I'm giving her an A+ for budgeting. Over the last 12 months, she has stayed more or less on budget, spending just slightly less than what she had available.
One key lesson has been managing every transaction herself, from paying her university fees and flat bond to the hundreds of other tiny transactions that crop up throughout the year. She gave herself a $65 weekly allowance, and when it was gone, it was gone. And she has stuck to it.
When a bigger cost came up, such as taking on an additional paper in her second semester, we covered the bulk of it, but she insisted on contributing 'her' money too. I love seeing this effort.
Ideally, she will find paid work during the semester in 2027, but landing a job when thousands of students arrive in town with the same idea is not easy. We have a few ideas, though, so let's see how that goes.
While she was successful with scholarships in 2026, we've looked high and low and struggled to find any she is eligible to apply for to help fund 2027. So, while we continue searching, that funding stream seems to have dried up. If you have any ideas, let me know!
The key has been understanding the costs and planning ahead
I wanted to write this blog post because I'm regularly asked how students can afford to study without debt, or how someone can pay cash for a large purchase. To me, they're effectively the same question.
And the answer is budgeting and planning ahead.
As we got to know our daughter as she grew up, it became clear to us that she was likely to pursue an academic path. In anticipation of this, we started teaching her about money, budgeting, and investing, while also preparing financially to cover some of her future costs.
There is no trust fund, and there is no financial support from extended family towards these huge expenses. The only way we could make this work for her was to plan ahead, together.
Most 40-year-olds couldn't comfortably cover an annual expense of this size, so how on earth do we expect our 18-year-old children to do it on a part-time income? We always knew we would play a role in supporting her financially for a time after she left home, so we prepared for it.
As I wrote this, she was deep in exam prep, but I quickly ran these numbers past her. Seeing the final tally of over $36,000 was confronting for all of us. That's a huge amount of money! But I'd much rather she knows exactly what her education costs, because then she's dealing with facts. From conversations I've had with former students, I know how easy it can be to lose sight of the costs when they're simply added to a student loan. Some have told me they barely knew how much they owed. Student loans certainly have their place, but the expense is real whether you borrow the money or pay as you go. This way, she sees the costs, understands the value of money, and can make informed financial decisions along the way. I think that's an education in itself.
What I'm most pleased about, though, is how she's taken responsibility for managing all of this. While Jonny and I have provided financial support, she's been doing the day-to-day work of managing her money, paying her bills, and preparing for what's next. Those are skills she'll use for the rest of her life.
Our goal for her is to come out of university with no debt, a good degree, plenty of options, and investments that are continuing to grow. So far, she's well on track.
I hope that by sharing her actual costs, we've helped future students, and the people supporting them, better prepare for the high cost of tertiary study. It's certainly not cheap, and we know that not every family is in a position to offer the financial support we have. Whatever your circumstances, understanding the costs, going in with your eyes wide open, making a plan, and starting as early as possible can make an enormous difference.
After all, our goal was never just to pay for her university education. It was to teach her how to manage money, take responsibility for her own financial future, and give her the best possible start to adult life.
So far, so good!
I’m interested to hear your own experiences of tertiary education, either as a student or a supporter of a student, in the comments below.
