Tertiary Education Minister Steven Joyce wants to link some funding for universities and polytechs to whether students get a job after they graduate.
Mr Joyce says that over the next two years the Government is moving tertiary providers to a system where some of their funding is based on how well they perform academically by preparing their students for life after study.
He says the performance-linked funding will be about 5% of overall funding.
During a speech at Victoria University the minister revealed other directions for funding criteria, saying he would like to see funding linked, ultimately, to "employment outcomes not just internal benchmarks".
Mr Joyce says that would send a strong signal to students about the qualifications and institutions that offer the best career prospects.
Mixed reactions to idea
Victoria University vice-chancellor Pat Walsh says there's merit in the idea. He says universities have always accepted they have a responsibility to support social and economic development.
Auckland University of Technology vice-chancellor Derek McCormack, who chairs the Vice-Chancellors Committee, says a lot of value to the economy and to society might be lost if universities were steered away from the more liberal and wide-ranging subjects.
The president of Victoria University of Wellington Students' Association, Max Hardy, says getting a degree is about a lot more than simply getting a job.
And Labour's tertiary education spokesperson, Grant Robertson, echoes that, saying universities are not vocationally based and have a role as critic and conscience of society.
The executive director of the Industry Training Federation, Jeremy Baker, says the idea would work well for some programmes - but not all.
If the purpose of a course is to prepare students for a particular occupations, Mr Baker says, then it's important to ensure they get the jobs.
