Places at many popular universities will be restricted next year to students who gain top marks at high school - a move which could stop up to 3500 young people studying where they want.
From next year admission rules at Auckland, Massey, Victoria and Otago universities, will become tougher as the institutions raise entry standard levels in all of the courses they offer.
Universities are funded for a set number of enrolments, but have been carrying the costs of thousands of extra students since the recession, which generated a huge increase in the demand for places.
Now, the universities will restrict placements to the number for which they are funded, meaning not everyone who applies will get in.
Massey, Victoria and Otago will cut numbers by introducing a preferential standard so it will no longer be enough to gain University Entrance - places will go to those with the highest marks.
Auckland University, which has had restricted enrolments for all undergraduate degrees since last year, will tighten its limits even further by increasing entry standard levels in several of its programmes.
Waikato University also plans to restrict enrolment although details of how it will work have yet to be decided.
Massey Vice-Chancellor Steve Maharey said school leavers with "higher pass rates in NCEA would be favoured for selection in enrolment" next year.
He said all tertiary institutions were dealing with growth in demand, and Massey had been working with the Tertiary Education Commission to try to manage that this year.
As a result it is closing second semester enrolments early, limiting what it can offer in summer school and tightening entry standards for next year.
An Auckland University spokesman said the university had tightened its entry criteria for next year with a view to "growing more slowly, improving the overall quality of the student body and increasing our proportion of postgraduate students".
The pending introduction of capped funding has also contributed to the changes.
There will still be specific allowances for some students - such as Maori or Pacific Islanders, students with disabilities and older students - but critics say the new system is unfair to high school leavers who have worked hard to pass University Entrance but not gained top marks.
PPTA president Kate Gainsford said it was unfortunate that the reason for the changes came back to funding.
The move left students in their last year of high school with a huge amount of uncertainty about their future.
"Some students who have picked certain courses to gain entrance to university may find that the goal posts have shifted, and that puts schools in a difficult position because they continue to try and do their best for their students in an environment that's in a state of flux."
There are also concerns that introducing preferential entry standards will leave many students who know they won't make the grade at high school waiting until they are 20 when it becomes easier to gain a place under the special admission scheme.
"Under the current law that's precisely what's going to happen," said University of Canterbury Vice-Chancellor Dr Rod Carr.
Dr Carr said the university success rate for students under 20 with University Entrance was about 85 per cent. For students over 20 without University Entrance, it was about 60 per cent.
"I cannot image that it makes sense to be locking out 19-year-olds with UE to keep open places for 21-year-olds without it. That's the madness we are walking into."
Tertiary Education Minister Steven Joyce said universities had always restricted enrolments in some courses, but it "would not be ideal to see too much of this at this time".
But it was likely that several factors would combine to slightly ease the pressure for school leavers seeking to enrol at university next year. They included the easing of the recession, changes to student loan entitlements for new residents and Australians and funding next year for 765 extra places.
Quality Public Education Coalition chairwoman Liz Gordon said restricting entry would have a negative effect on students who did not make the grade.
"University entry isn't just about a spreadsheet of names and some are in and some are out.
"It's not just about beancounters, it's about each individual's life opportunities.
"We are going to be the thick country because our universities are going to be desperately trying to reduce the number of people who go while other countries all around the world are trying to increase those numbers."
TOO MANY
More than they can afford:
* Auckland - carrying an extra 800 students at its own expense this year
* Massey - around 1500
* Otago - 550
* Victoria - estimated 600
Top brains only - varsities cut class sizes
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