Researchers are urging the Government to stop funding low-level tertiary courses that put young Māori into debt with no benefit to their future earnings.
Their study, He Awa Ara Rau, tracked education and employment of 76,000 Māori to age 25.
It found 18 per cent got tertiary qualifications at levels 1-3 but those courses did not lead to higher incomes and better job prospects.
The study said even those who achieved NCEA level 2 at school and completed a level 3 certificate at a tertiary provider would have been better off staying at school.
"A disproportionate number of rangatahi leave school after completing NCEA Level 2 to go on to level 3 certificates at PTEs [Private Training Establishments]. Unfortunately those that do will earn significantly lower wages by age 25 than those rangatahi who stayed longer at school," the report said.
It called on the Government to stop funding such courses.
"There are providers in the tertiary education sector that are indebting our rangatahi and providing them with qualifications that don't result in better employment outcomes or higher incomes. We need to investigate decommissioning tertiary study that is evidenced to result in poor employment and income outcomes."
The study was conducted by Business and Economic Research Limited economists in collaboration with Waikato Tainui, Auckland Council's Southern Initiative and Tokona te Raki: Māori Futures Collective of Te Rūnanga o Ngāi Tahu.
Tania Pouwhare, a social intrapreneur for the Southern Initiative, said low-value tertiary courses were a particular problem in South and West Auckland.
"They're coming out and they're no better off in the labour market than if they had just stayed at school, finished Year 13 and then gone straight into a job from there, but what they have done, on average, is rack up $17,000 of student loan debt," she said.
She said that debt was essentially worthless, because it had not helped the students get ahead in life.
"The qualifications that they are gaining tend to be for industries which are low-paying as well, so it's a bit of a double-bind, they've racked up debt for qualifications that aren't really going to help them earn enough money to even pay off that debt, let alone to thrive and have a really good career."
Pouwhare said the problem was long-standing and it needed to be resolved quickly, because increasing numbers of people were expected to be unemployed in South Auckland.
The executive director of Tokona te Raki, Eurera Tarena, said young people needed better information about the courses they could study.
"They need to be equipped with good information," he said.
"But also we need to be holding the system to account, and if we are pumping money into programmes that aren't necessarily leading to better outcomes for our people then we need to be raising the question of what's going on there."
A senior economics researcher at Business and Economic Research Limited, Hillmarè Schulze, said 19 per cent of Māori in the study left school with no qualification and that group needed particular help moving into further education and employment.
But she said getting a tertiary qualification at levels 1-3 was of little help to that group.
"It made hardly any change to their income," she said.
She said some fields of study were more valuable than others.
"It depends on what ... courses they do, and in what sector. It's the same as with apprenticeships because if you look at engineering apprenticeships, it has a huge positive outcome, whereas apprenticeships in the hospitality industry, it might not have such a positive outcome."
Schulze said Māori who achieved NCEA level 1 at school were likely to stay in school and have similar outcomes to non-Māori.
The Tertiary Education Commission's response
The Tertiary Education Commission's deputy chief executive, strategy and design, Ian Lee, said it could withdraw or decline support for courses and programmes that did not meet a range of criteria.
"There are cases where concerns about likely poor outcomes for Māori learners have been part of our decision not to invest additional funding to new or existing courses at level 1-3," he said.
Lee said the commission was increasingly directing its investment away from courses with poor post-study outcomes for learners.
"We also have a strategic role in terms of making TEOs [tertiary education organisations] and students aware of employment and career prospects after qualification through the information on our careers.govt.nz website," he said.
However, he said courses at levels 1-3 were important because they provided access to low-cost essential foundation skills for under-served learners that helped them move on to higher-level study and skilled employment.
"The major focus of our attention is course completion rates and progression to higher courses."
He said work-based learning at levels 1-3 provided trainees with essential skills for some roles and for progression to higher level training and development.
Lee said the commission's goal was for participation and completion patterns for Māori and Pacific learners that were the same as for other New Zealanders in the tertiary system within five years.