Tertiary education groups are calling today's budget "short-sighted" and a negative step for the future of the country.
Among the changes, the repayment holiday for overseas-based borrowers will be reduced from three years to one, and borrowers will be required to apply for the repayment holiday before going overseas and provide a New Zealand contact.
The definition of income for student loan purposes will be broadened to improve fairness to New Zealand-based borrowers.
Borrowing for those aged over 55 will be limited to tuition fees, part-time full-year students will not be able to borrow for course-related costs, and loan eligibility for students with overdue repayments of $500 or more will be restricted. As well, the repayment threshold will be held at $19,084 until 2015.
Thousands of potential students would be shut out of tertiary education because of the short-sighted budget, New Zealand Union of Students' Associations (NZUSA) co-president David Do said.
"The government has failed to take the opportunity to tackle the real issues...It had a real opportunity to show its commitment to properly invest in education, ensure fair access, and tackle student debt - it has comprehensively failed on almost all counts."
The Government was discriminating against older learners and making it harder to those over 55 to upskill and retrain, while changes to course costs for part-time students would make it difficult to buy textbooks and materials.
"Students see very little that will reverse the increasing pressure on the tertiary sector. When it comes to the future of this country this isn't good enough," Mr Do said.
NZUSA women's rights officer Caitlin Dunham said the Government had put education out of the reach of many, particularly women.
"Students over the age of 55 are disproportionately female, from a time when tertiary education was not widely promoted as an option for women. These are the women who may not have had access to higher education when they left school, and now that they are older and have raised families, need to receive formal training to re-enter the workforce," Ms Dunham said.
Revenue Minister Peter Dunne said the changes reflected the budget's focus of personal responsibility and better value for taxpayers. The Government has also made moves to limit lending to other borrowers who are less likely to pay back the debt.
Tertiary Education Minister Steven Joyce said the changes would ensure people met their repayment obligations and the savings would be used to provide funding for new tertiary initiatives.
Extra funding to tertiary education allocated in the budget includes $17.5m over four years for specific funding for English as a second language courses, $40m to raise New Zealand's profile overseas, and $42m for increased trade training.
But Universities New Zealand chairman Derek McCormack said the extra money did not keep up with inflation, let alone the real increase in university costs.
High demand for student places meant universities continued to carry more students than the Government would fund.
"The challenge remains for the government to increase real investment in future budgets to ensure New Zealand's university system is able to continue to deliver internationally competitive education and research."
BEST Pacific Institute of Education welcomed the Government's announcement of up to 750 additional places at new and high-performing private training establishments, as well as 40 additional medical places for 2012.
