Paula Bennett says the Government's fees-free tertiary policy has been a "complete failure".
The flagship policy came into effect on January 1 this year, giving first-time students the ability to apply for one year of free university study or two years of free industry training.
Education Minister Chris Hipkins says the initiative is tracking well after its first year, with more than 40,000 people receiving fees-free study or training.
"The impact on students' lives is already clear," he says. "Statistics for January to September 2018 show that 31,600 fewer students borrowed to pay tertiary fees.
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"The amount students had to borrow for fees also fell, down $193 million on the same time last year."
The Minister says those numbers show strong progress in reducing financial burdens and barriers for Kiwis pursuing higher education or training.
But National Party deputy leader Paula Bennett says the policy - which she refers to as an "election bribe" - has failed to attract more people to higher education, with 2400 fewer students in tertiary education and training than a year ago.
"This policy is costing taxpayers $2.8 billion and we're going backwards," she says.
"[The Government] should never have over-promised and should be spending this money in education areas where it is really needed."
Tertiary enrolments are about the same as they were at the same time in 2017, while enrolments in Private Training Establishments (PTEs) have dropped by 674.
There was a significant drop in tertiary provider enrolments of about 5000 during 2017, leaving polytechnics and technology institutes struggling financially.
"Given the difficult last couple of years that many of our polytechnics and institutes of technology have experienced, the stabilising of enrolment numbers in that sector is particularly encouraging," says Mr Hipkins.
"This has more than offset the large declines at several institutions, with an overall increase of 678 students on August 2017 figures.
"While significant financial challenges remain for many Institutes of Technology and Polytechnics (ITPs), this is good news for the sector as a whole."
National's Māori Education spokesperson Jo Hayes says the policy is also failing Māori students, who are accessing fees-free study in lower numbers than their European counterparts.
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"Māori make up 21 percent of enrolments but only 17 percent of fees-free recipients," she says.
"When combined with a reduction in the overall number of students studying, including a large 1188 drop at Wānanga [tertiary institutes catered to Māori learning] compared with this time last year, this policy is shown to be a complete failure for Māori."
However Mr Hipkins says the numbers can be easily explained by two key factors.
"Many of the students that are enrolling at wānanga are older learners whom have a high likelihood of prior tertiary study and therefore are ineligible for fees-free.
"There are also many programmes offered at the wānanga which were 'fees-free' prior to the introduction of the fees-free policy.
"Therefore, students enrolled in these programmes will not be receiving a financial benefit from the fees-free policy."
The Government will release a more complete picture of how the fees-free policy is going in early 2019 after more data is collected for the full 2018 year.
There's no indication that its initial plan to expand the policy to two fees-free years by 2021 and three fees-free years by 2024 has changed.