The student allowance parental income threshold will be frozen this year, Tertiary Education Minister Steven Joyce has announced.

Student allowance rates and student loans living costs will be increased by 1.77 percent on 1 April 2012 as part of the 2012 annual general adjustment.

He said the student allowance parental income threshold had increased well ahead of wage growth and inflation.

In 1992, the threshold was $26,832 - which was $42,049 in 2011 dollars.
That compared to the current threshold of $55,026, under which students were eligible for an allowance.


Mr Joyce said freezing the threshold will affect approximately 1,500 students over four years from families with incomes above $82,000 who would have been eligible for a partial allowance if the threshold had continued to increase.

"Freezing the threshold at current levels is the first step in curbing the major expenditure increase in student allowances over the last few years as we look to better target this support to students who need it most," Mr Joyce said.

Government expenditure on student allowances has increased from $385 million in 2007-08 to $620 million in 2010-11: a 62 per cent increase.

"Part of this increase can be attributed to significant increases to the student allowance parental income threshold in the 2000s.

"In the current tight fiscal climate, there is a need to control this increase in expenditure to ensure that allowances remain affordable as a source of support for low-income students," he said.

"Continuing to improve the performance of student support lets us invest further in our tertiary education priorities including research, science and the Youth Guarantee."