Key Points:

New Zealand First leader Winston Peters says Labour has underestimated the cost of its universal student allowance policy.

NZ First is a long-standing supporter of a universal allowance and Mr Peters today said Labour had adopted the party's policy, but it had its costings wrong.

Labour leader Helen Clark yesterday announced the policy would be phased in over four years, by which time it would cost $210 million a year.

Mr Peters said that was too low.

"This cannot be accurate," he told Waikato University students on a campaign stop.

"Refer the numbers to your economic department - I bet they agree with me when I say the cost is much more than that.

"It is serious money, but the cause is also a serious and worthwhile one."

A Treasury analysis earlier this year put the four year cost of an immediate universal allowance at $700 million.

Because of its phased nature Labour's policy would cost nothing next year and Helen Clark said she expected economic growth to have rebounded by 2012.

Helen Clark said the $210 million a year figure Labour had provided also took into account a reduction in the amount borrowed for student loans as a result of the allowance.

National has questioned how Labour will pay for the policy.

During a speech at the university Mr Peters encouraged students to vote for NZ First to "make your parents' future better and help you save your Grandma".

Earlier today Victoria University's vice-chancellor Pat Walsh said a universal student allowance would do nothing to improve the quality of university education.

He said the money would be better spent on increasing university funding.

The Association of University Staff also said funding should be increased.

The Auckland University Students' Association said vice-chancellors were out of touch.

"While most vice-chancellors are paid six-figure sums every year, the students they preside over graduate with five-figure debts," said the association's president David Do.

"What is the use of world-class facilities and well-paid lecturers if the students being taught are too hungry and tired to learn?"