New research shows two-thirds of Australian university students live below the poverty line and financial stress is on the rise.

Universities Australia surveyed close to 12,000 full-time undergraduate and postgraduate students.

Twenty-one per cent of respondents had an annual income of less than $10,000, and a further 40.3 per cent earned between $10,000 and $19,000.

The mean annual income was $18,634 for undergraduate students.

The report found one in five students occasionally goes without food, up from one in eight in 2006.

It also found half of students rely on financial support from their families to keep studying.

Two-thirds of undergraduates reported being worried about their financial situation, and the level of financial distress was even greater amongst Indigenous students and people from low socio-economic backgrounds.

"This report clearly shows that financial stress on university students is increasing," Universities Australia chief Belinda Robinson said in a statement.

"While the impact of this on dropout rates and future enrolments is unclear, it is of sufficient concern to justify close monitoring."

The chief of the Australian Council of Social Service (ACOSS), Cassandra Goldie, says the youth allowance payment is not enough.

"One of the major reasons is that the youth allowance, which many students rely on, is $29 a day," Dr Goldie said.

"Like the unemployment payment, it hasn't been increased in over two decades. It is clearly not enough for them.

"We are urgently urging the government to put a proper increase into that payment for them."

'The system is broken'

Dr Goldie says Australia's education system was designed on the idea that students were able to live at home and were funded by their parents or guardians.

"That's clearly not the case for many, many students," she said.

"When you've got two-thirds of them living below the poverty line, you know that the system is broken.

"We need to have a mature system which enables people to be able to get a better education and not have to live in poverty to do that."

The National Union of Students has called for the age of independence be lowered from 22 years to 18 years to increase the number of people who qualify for support.

But Ms Goldie says it is not a quick fix to addressing high rates of poverty.

"The Government has talked a lot about wanting to have a world class education system... that means staying with students right through their education system, including tertiary education," she said.

ACOSS says housing affordability is another reason for student poverty.

Dr Goldie says young people need stable and decent living conditions in order to complete their education.

"They're often living in very substandard accommodation, which is no place for them to be able to get a good nights sleep and be able to study well," Dr Goldie said.

"We know that housing affordability is a major problem right across the community, but particularly for students who have the least income of all."