Privately run tertiary education centres say their position is being jeopardised by a decision to sit on cash needed to run courses.
The Tertiary Education Commission (TEC) put up $23.8 million to fund private training establishments for next year, but it has allocated just $9.8 million of that.
Of the
537 applications, 107 were dismissed instantly and just 87 gained a share of the cash.
Commission general manager Ann Clark admitted the sector would be disappointed but was confident the TEC "has approved all eligible applications".
Sandra McKersey, president of the Association of Private Education Providers, said the announcement had been met not just with disappointment, but with anger.
"The indication is already that some will find it difficult to continue operating next year," she said.
"At no time during our discussions with TEC has the possibility of underspending the amount available ever been raised."
The $23.8 million, under the Strategic Priorities Fund, was created to "promote innovation" within tertiary education. Courses must pass strict criteria to meet regional needs and development and be aligned to the Tertiary Education Strategy.
Applications were also assessed on student achievement.
Ms Clark said the assessment was "robust" and would help to strengthen the overall portfolio of courses provided nationally.
But Ms McKersey said programmes which previously met the rigorous criteria had failed to do so this time without explanation.
There was a firm belief in the sector that Government was sidelining private tertiary education in favour of public schooling.
"Private provision is such a small part of the tertiary budget, but there seems to be a huge amount of effort going into managing it," Ms McKersey said.
The association represents about 360 providers - accounting for about half of the student population, but the sector has experienced rigid funding capping over the past two years and bad publicity with the high-profile collapse of language schools Carich and Modern Age.
Meanwhile, funding approval for Maori language "sing-along" courses at public institutions has heightened friction between public and private providers.
