A government review of universities is asking if students are paying the right amount in fees for their degrees.
The University Advisory Group is also considering whether universities could make further cuts to their spending.
The questions in the advisory group's recently-started third round of consultation have alarmed organisations representing universities, their staff and their students, though the group has told RNZ nobody should read anything into the questions.
The advisory group said the consultation was focused "on efficiencies and prioritisation as well as funding for teaching, learning and research, and capital expenditure".
That included the tuition fees paid by students.
"Does the current system have the right balance of public (tuition subsidies) and private (student fees) contributions to the cost of university education, and what changes should be considered to tuition fee arrangements for domestic students," the consultation said.
Victoria University of Wellington Students Association president Marcail Parkinson doubted the group was thinking about lowering fees and said she was surprised it had raised the question at all.
"I think we've had three meetings so far with them and previously when I've tried to raise concerns around the cost of education they've said that this group is not the place to have that discussion. So it's a surprise to me that they're now talking about the cost of education," she said.
Students currently paid about a third of the cost of their tuition with the government paying the rest, though universities also had other income from research, consultancy and foreign student enrolments.
Parkinson said students had endured rising costs and they needed a break.
"Even just this year we saw the government increase the amount they were giving universities by quite a low percentage while letting universities increase their fees to students by around six percent," she said.
The advisory group also asked what universities could reprioritise if their funding did not increase.
"While understanding that institutions have already made some hard decisions, what reprioritisation might further be considered within your institution to do so if funding is not increased? What would be the criteria for reprioritisation? How would the approach be different if a more system wide approach is taken?," the consultation asked.
"Treating the sector as a system what might be reprioritised or changed to achieve greater efficiencies? What would be the criteria for reprioritisation?"
Tertiary Education Union national secretary Sandra Grey said the questions were alarming.
"The really big thing that the whole sector's going to look at is the idea that there can be any efficiencies whatsoever now in the system which is totally under-funded. Everyone's going to look at that and go 'we're basically at bare bones now, what more can be done'," she said.
Grey said if New Zealand wanted a quality public education system, it needed to invest in it.
Universities New Zealand chief executive Chris Whelan said universities had already made all the easy cuts to their spending.
"Universities have had to make a whole range of efficiencies over the last 10 or 20 years. Every sort of technology that makes sense, just reorganising, and actually there's not much left and I think the university advisory group is probably coming up against that. They're finding there isn't any obvious areas of savings."
The advisory group also asked about encouraging cooperation between universities and reducing competition.
Whelan says universities already cooperated where they could on procurement and technology and while more could be done, it would require investment.
He said the government needed to accept that the problem was simply under-funding.
"Our real worry is just simply that we're taking an awful long time for the government to realise that actually our problem is just simply under-funding over a long period of time," he said.
"We don't have any university that's at risk of failure but what we do have is constant pressure on universities to take decisions around how are they going to manage through the next three to five years."
The advisory group's chair, Sir Peter Gluckman, told RNZ in statement the group had no predetermined views.
"One has to look at all dimensions of the funding mechanisms that support the university sector. No-one should read anything more into the questions other than simply allowing views to come forward."
The advisory group had already completed two consultation rounds.
The first round covered the role of universities and the shape of the sector while the second round covered the core activities of teaching, research and knowledge transfer, university governance and management, and the legislative and regulatory framework.
It said responses to the first round "while diverse, showed strong support for considering the eight universities as a more integrated system".
"There is support for more cooperation and, especially at the graduate level, specialisation. It is recognised that technology is impacting on future provision at all levels."
The advisory group made an interim report to the government in September.
Education Minister Penny Simmonds told RNZ she intended to release the report later this year after Cabinet had seen it.
A final report was expected next year.
