Students will be able pay for their tertiary education by "time worked" under a New Zealand First policy.
Education spokeswoman Tracey Martin told the party's annual convention in Dunedin the Up Front Investment Tertiary Education Policy was based on the idea of students having a skill debt rather than a financial debt for their education.
"A year worked in New Zealand will reduce the skill debt by a year," she said.
She said the level of student debt in New Zealand is unsustainable.
"This fits with our existing policy of debt write-off for those spending five years in the regions working in critical skill shortage areas," she said.
Students will compete more to get into courses to ensure a better fit between the student and the field of study.
New Zealand First will also widen the apprenticeship scheme to include non-traditional areas, such as truck driving in a bid to attack areas of known skills shortages.
It wants more internship and work experience opportunities during and after school years and will pay the job seekers benefit to approved employers when taking on an apprentice.
It will use bonding system models for certain industries including the training of teachers, nurses, doctors and police.
NZ Student Unions president Linsey Higgins is pleased to see the issue of student debt being tackled.
High levels of student debt are impacting on people's ability to start families, buy houses and prepare for retirement, she said.
"Significant variances in course costs and graduate wages can see some of our most important members of society such as nurses and teachers left with the burden of debt for longer.
"This policy treats all graduates as equal. One year's study equals one year of skills commitment," she said.
The cost is estimated to be nearly $5 billion.
Party leader Winston Peters is due to speak on Sunday when more new policy is expected to be announced.
Media are speculating Mr Peters may consider retirement if he is not kingmaker after next year's general election.