Postgraduate students are working long, minimum-wage hours, selling their cars and moving in with their parents to complete degrees, after losing $240 a week in student allowance.

The Government's scrapping of the postgraduate student allowance at the beginning of the year has been reflected in falling domestic numbers at New Zealand universities.

Before January, student allowances had given postgraduates grants of about $240 per week. Now they can borrow only $173 a week under the student loan scheme - and it must be paid back.

James Mills-Kelly is in his final year studying for a masters in environmental policy at Lincoln University.

This year the 28-year-old had to move in with his girlfriend because he could not afford to continue flatting. He also had to sell his car.

"It is not a good position to be in. I'd much rather be paying my way," he said.

He works two days a week landscaping and labouring on top of his 60 hours-a-week study.

"It makes it much more difficult, especially when you are trying to write a thesis."

Mills-Kelly said that if the Government had to pull back costs, it would be better to withhold allowances for first-year undergraduates.

"[First-year] has such a high drop-out rate that it would save a lot of money and it would sort out the people that are committed to their study," he said.

Michelle Bouton, 23, is struggling to complete her master's in marketing at the University of Canterbury.

She works eight hours a week and needs to do more. However, she struggles to balance the hours she must spend studying against the need to earn money.

"It is quite difficult finding the time to fully commit myself to my master's," she said.

"If I had known [that allowance was not available] I would have had second thoughts about coming back to do master's."

She is grateful for the $173-a-week loan but knows "it is extra to pay back".

She has many friends in similar positions who have been forced to move back to the parental nest or drastically downsize their budget, while taking on additional, minimum-wage working hours.

"I know a lot of people who are really annoyed by it," Bouton said.

The loss of allowance has been reflected in falling postgraduate numbers at most universities. Enrolments for master's and PhD courses at Lincoln University are down 27 per cent and 11 per cent respectively from last year.

However, a university spokeswoman said Lincoln was forecasting for around 80 more fulltime students to enrol in postgraduate courses throughout the coming year.

If that happens it will bring the overall number of postgraduates up to 431 - a climb from the 418 enrolled last year but still below 2009's peak of 537.

The University of Otago has been similarly affected.

Compared to the same time last year, PhD enrolments are down 5 per cent, master's numbers are down 4 per cent and postgraduate diploma students are down 12 per cent.

However, the University of Canterbury is experiencing a PhD renaissance, with 886 students currently enrolled.

Out of that number, 48 per cent are Kiwis.

The remainder are international students, with the largest groupings coming from India, Malaysia, China, the US, Germany and Iran.

Most PhD students win scholarships to Canterbury "so the effect of removing student allowances is not likely to be significant for our PhD students," a spokesman said.