The government is giving the West Coast's struggling Tai Poutini Polytechnic a $33 million bailout.
The announcement comes as a Tertiary Education Commission report is due to reveal the institution massively under-delivered in its courses.
Education Minister Chris Hipkins today said the government would give the polytechnic $8.5m so it could stay open in 2018.
The TEC was preparing to write off nearly $25m in debt, which resulted from under-delivery between 2010 and 2016, he said.
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"It simply cannot afford to repay this amount."
It had been clear for some time Tai Poutini was in serious trouble and substantial change was needed, Hipkins said.
However, a business case of options for Tai Poutini had been deferred until wider changes were made in the polytechnic education sector.
Tai Poutini was one of 16 polytechnics suffering from alarming drops in student numbers and a "sector change" was critical to their futures.
"It is critical we address these challenges across the whole network, rather than just one organisation at a time. We need a lasting solution to this long- standing challenge."
The government was baling out Tai Poutini because it was committed to tertiary education on the West Coast, Hipkins said.