Students say an extra $50 a week could be the difference between living in a cold and damp flat, or a warm and dry one.
Labour today announced its tertiary education policy, which includes boosting allowances and the amount that can be borrowed for living costs, removing the seven-year limit on post-graduate borrowing and bringing forward the first year of free tertiary study to 2018.
Some students said the policy would help remove some of the stress while studying.
At the moment, the student allowance is about $170 a week, with up to $40 extra for accommodation costs.
At Victoria University Kelburn campus, students said that allowance barely covered the rent for a dodgy flat, and a boost was sorely needed.
Hannah O'Byrne, a third-year law student, said $50 would make all the difference.
"It will make a huge, substantive difference. At the moment my student allowance and loan covers my rent and I live in a s***hole, it's a really awful place and that's why it's so cheap. With an extra $50 I could live further away and get the bus in.
"[With] an extra $50 I could ... afford to live somewhere a little more habitable ... in a place that's not going to make me sick all winter and being able to live somewhere comfortable and dry and healthy.
"I think there's a difference between having it tough and having it dangerous. My friend has asthma and he can't come over because it's too mouldy. Being damp and sick is not just having it tough, it's a little bit inhumane."
Music student Zane Berghuis said it would help him pay for the basics, such as bus fares and a balanced diet.
"It would give me a bit more freedom and remove some stress from studying, because I do come up to uni seven days a week to practice every day, so travelling from Newtown to school will make it a lot easier," he said.
Union of Students' Associations president Jonathan Gee welcomed the announcement.
He said tertiary education should be a right for all, not a privilege for those who could afford it.
"Students are engaged in part-time work, but a lot of them also are engaged in full-time work on top of their full-time study.
"They're focused much more on economic survival rather than academic success," he said.
Mr Gee said while the policy was a good start, more would be needed to bring down student debt.
National Party leader Bill English said the multi-billion dollar cost would be carried by taxpayers.
"They want to tax truck drivers more so that we can have more lawyers," he said.
"I mean, there's no such thing as free tertiary policy.
"If they want to have a big spend on students that's coming out of the pockets of the process workers that I met with this morning at King Salmon."
Mr English said students with the highest housing costs would get a $20-a-week boost from National through the accomodation benefit from April of next year.
The ACT party said the policy was unfair on a generation of New Zealanders and it did not make sense to increase borrowing.
Last year, the Child Poverty Action Group [http://www.radionz.co.nz/news/national/310013/rethink-interest-free-student-loans-child-poverty-group
released a report] showing half of all students were in financial distress and that situation was severe for one in six who could not afford shelter or food.
The group's economic spokesperson Susan St John said there was much to applaud in Labour's policy.
"We have a situation where students are having to go to foodbanks, but they can't complete their studies because they simply don't have enough of the basics.
"It is a dire situation, it's good to see Labour is doing something but it's just starting the reforms that are needed."
Those reforms must include lifting the parental income and repayment thresholds, a debt forgiveness programme, and lifting students' inability to access the working for families programme, Associate Professor St John said.