More than three-quarters of all students were considered too rich to be eligible for a student allowance in 2000, Education Ministry figures show.
Even families deemed poor enough for welfare handouts to pay rent and doctors' bills were still expected to help support their children through years of study.
The ministry's figures
show fewer than a quarter of all students, including just 24 per cent of Maori students, were eligible for an allowance in 2000.
That was a dramatic decrease in the numbers eligible in 1998, when about 34 per cent of all students met the allowance criteria.
Student leaders said it was not that families were any better off two years later, but that the income threshold for qualifying for an allowance was set too low and had not been shifted in 10 years.
"In effect you now have to be quite poor to be eligible," New Zealand University Students Association co-president Andrew Campbell said.
Under the student allowance scheme, the family of a student aged under 25 would need to have a combined family income of less than $28,080 before they could get a full allowance.
However, a Wellington family of three children and two adults earning the same amount would be eligible for several state welfare benefits to help them survive, the Ministry of Social Development confirmed.
That would include $68 in accommodation supplements if the family paid $250 in rent, the possibility of a disability allowance and cheap medical care through a community services card.
Mr Campbell said increasing allowances should be a priority for the Government heading into an election later this year.
The comparatively high rate of Asian students - 45 per cent - who qualified for an allowance showed the ability some people had to work their way around the eligibility criteria.
The low rate of eligible Maori surprised the national Maori university students association, Te Mana Akonga.
Spokesman Geoff Karena said Maori students ineligible for the allowance would be forced to borrow from the loans scheme, but had much lower average incomes and took longer to pay their loans back.
"Given what we know about the socio-economic status of many Maori, only 24 per cent accessing student allowances seems very low," he said.
A spokesman for Tertiary Education Minister Steve Maharey said Labour had highlighted access to the allowance scheme as an issue.
But it could not afford yet to adjust the thresholds.
- NZPA