The Association of Private Education Providers is warning it is the long-term unemployed and at risk youth who will be most affected by funding cuts.
The association says the cuts, proposed by the Tertiary Education Commission, could see more than 1000 students lose training opportunities at more than 20 providers.
Among the courses that would be affected is the Salvation Army's Employment Plus programme, which operates in about 30 centres throughout New Zealand.
The programme provides training for young adults and those with low qualifications and the Salvation Army believes 11 of its centres could close if the cuts go ahead.
The president of the Association of Private Education Providers, Karl Yates, says with rising unemployment, demand for programmes is increasing.
The Tertiary Education Commission says the decrease in funding coincides with low unemployment levels and the introduction of new initiatives to increase the skills of New Zealanders.
Nevertheless, the commission wants to hear from anyone who feels the cuts will affect their viability.