Some tertiary students have found a way of cheating the loan system to get allowances of up to $300 a week, even if they are already getting big handouts from their parents, their peers say.
Some parents are reportedly in on it - funnelling money into businesses and trust funds so it appears that their household income is below the eligibility threshold.
Unlike the student loan living costs payment, the allowance does not need to be paid back, and ineligible students who are being saddled with huge student loan debts say it is just not fair.
A student at the University of Canterbury says both her flatmates get the student allowance, despite their parents being very wealthy.
"It's a bit frustrating, just because I feel like they really don't need the help and they're the ones getting it. I've been kind of struggling for quite a while, but never really get anything."
The student said her flatmates' parents were not working full-time, so did currently earn less than the eligibility threshold, but they were rich in cash and assets.
They paid for the flatmates' cars, medical costs, flights and other expenses, while she had taken on extra work to fund her studies.
"Now I'm working 37 ½ hours, I'm taking one course so that I can stay afloat and have enough money."
To be eligible for the allowance, a student's parents must earn less than $118,000 if they're living away from home, or $128,000 if they're living at home.
The student said the system needed to change.
"It would be nice if there was things in place to register how much debt your parents have, so that people who kind of need it can actually get it."
Parents accused of hiding income
A student at the University of Auckland said students were receiving the maximum allowance while still getting hundreds of dollars from their parents every week.
"I used to find this so unfair, I consider myself a honest person especially when it comes to money, so I never wanted to even try. I've always asked how do they even do it, because even though my parents also earned above the income bracket, I was never eligible and my parents were struggling financially."
She said some parents were hiding parts of their income from StudyLink so their children could still receive the allowance.
"Their parents somehow show StudyLink bank accounts where they don't earn any form of money or very little, while they have another bank account where they earn their main income."
Students were also able to claim the allowance if they could prove that they do not receive support from their parents.
"They'd also say that they're not living with them to ensure that they get max student allowance."
An Auckland woman was shocked to discover that her daughter told StudyLink her family had broken down, in order to get the allowance.
"We found the paperwork for the StudyLink student allowance, she said she has had a breakdown and that that's the only reason she wants the money."
Victoria University of Wellington student Louis Jardene said some people felt they had no choice and had to deceive StudyLink.
"I wouldn't say that they do it maliciously or out of a sense of rebelling to society generally. I'd say people just feel compelled to do what they can to survive."
A number of his peers used the system in this way.
"I couldn't give a concrete figure, but it is certainly widespread."
Checkpoint has also spoken with students who are misleading Studylink in order to get the allowance, but they would not agree to be interviewed.
Auckland University Students Association president Alan Shaker said the system for assessing parental income was not fit for purpose.
"I would personally like to see us having no levels of allowance as opposed to a tight threshold. You are either above it or below it, and and that's how much you get."
The Ministry of Social Development said in a statement that it tried to intervene early when concerns were raised about potential fraud.
It said any change to policies around parental income and student allowance eligibility were decisions for the government.
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