The Government is to write off $18 million of debt at the Western Institute of Technology at Taranaki (WITT).
The polytech in New Plymouth has been in the red since 1999.
Despite a series of government grants and loans, it has been unable to balance its books and became the only tertiary institution to be taken over by a Crown Commissioner 20 months ago.
Tertiary education minister Pete Hodgson says WITT is now financially stable and approaching enrolment and budget targets for this year.
The debt will be written off over five years if WITT achieves a series of financial and educational milestones.
The commissioner will also replaced by a new council to govern the polytech from October.