The Government's tertiary education budget represents a continued ''squeeze'' on the sector, with funding for most subjects not even adjusted for inflation, both the Otago Polytechnic and the Otago University Students' Association say.
Changes to tertiary education in the Budget include further reductions in student support spending, with over-65s no longer eligible for student allowances from next year and over-40s eligible for them only for 120 weeks of study, down from 200 weeks.
The Budget also includes a crackdown on borrowers who are overseas, including enabling the worst defaulters to be arrested at the border.
It contains a 2% increase for engineering and science but, for the third year in a row, no increases in funding for other subjects.
Otago Polytechnic director of communications Mike Waddell said while ''any additional money'' was always welcome, it was important to note funding for most subjects had not even been adjusted for inflation.
''Costs continue to increase, which are beyond our control, so we are continually being squeezed,'' Mr Waddell said.
The polytechnic was happy with the extra $40 million over the next four years to market New Zealand's international education. Tertiary Education Minister Stephen Joyce said changes to student loans and allowances, including for over-65s and over-40s, were expected to save the Government $29.6 million in 2013-14.
Other measures included extending the student loan and allowance stand-down period for permanent residents and Australians from two to three years.
''We have been determined to achieve a sustainable level of student support, while maintaining interest-free student loans and targeting additional support to students who need it most,'' Mr Joyce said.
The crackdown on borrowers overseas was aimed at reducing the percentage who did not meet interest payments from 14% to 3.5%.
''Overseas-based borrowers are continuing to let the side down with slow repayments and high levels of loan defaults,'' he said.
The move included extending the child-support border-arrest system so the worst defaulters could be arrested at the border.
Borrowers overseas would also have to pay more off their loans each year, so that a borrower with a $50,000 loan could pay it off in as little as 21 years as opposed to 82 years under the current rules.
A private debt collection agency in Australia would also be used to catch the 10,000 believed to be dodging repayments there.
Universities New Zealand, which represents all eight New Zealand universities, said that while it was happy science and engineering had received a boost, it was concerned that funding for other subjects had stayed flat.
''There is also some concern regarding restrictions on student allowances, which is likely to have negative implications for access to tertiary education, particularly amongst Maori and Pasifika students,'' chairman Prof Pat Walsh said.
Otago University vice-chancellor Prof Harlene Hayne was unable to comment yesterday but a university spokeswoman said her views were reflected in the Universities New Zealand release.
OUSA president Francisco Hernandez said the Budget would result in more fee increases for students.
''The lack of any real inflation-adjusted funding ... has meant that more and more of the burden of funding tertiary education institutions have to fall on the students as universities are forced to increase fees,'' he said.
He also slammed the Government's decision to cut student allowances for older students as ''appalling''.
''The amount of individuals who would access the student allowances at the 40+ and 65+ ages are so little that this amounts to nothing more than penny-pinching for political posturing,'' he said.