The Design School, at the corner of Walton and Robert streets, opened in 2014 and teaches NCEA level 2 through 4 design, fashion and graphics courses. The level 2 courses were fees-free, but the Tertiary Education Commission recently indicated it would not continue to fund these next year.
Fellow Northland tertiary provider NorthTec had received similar news and may have to cut up to half its level 2 courses in 2017.
Level 2 courses were particularly valuable for students who had left school without a formal qualification.
Mr Saywell said the thought of the school closing was "heartbreaking", but that he could accept it so long as something equally good was funded in Northland in its place: "So long as there isn't a gap, I can live with that."
The school had about 40 graduates in its first year, and another 40 this year. Next year's enrolments were almost full already.
TEC chief executive Tim Fowler said the commission was yet to formally confirm its funding, so he was limited in what he could say.