The Government is set to appoint a Commissioner to oversee Unitec in Auckland, the biggest polytechnic in the country.
Education Minister Chris Hipkins said the Government wants to ensure the institute of technology is supported.
Unitec is facing a shortfall of $19 million in 2018 and $27 million for 2019, and is facing falling student numbers.
"Following consultation and considering 23 submissions, I have notified the existing Unitec council of my plans to dissolve it and appoint a Commissioner to address Unitec's financial difficulties," Mr Hipkins said.
Unitec's council has 21 days to respond before a final decision is made. If the Commissioner is appointed, Unitec's governing council could be dissolved.
"Our message for students is that the Government is committed to ensure top quality vocational education and training is available at Unitec and they should have every confidence that its financial issues will be addressed," Mr Hipkins said.
Last year Unitec reported a $31 million deficit.
The polytechnic has campuses in Mt Albert and Waitakere, and teaches courses from certificate to doctorate level.