STUDENTS have clashed with police in a dramatic protest outside State Parliament this afternoon over proposed federal funding cuts to higher education.

The protesters burnt an effigy of Prime Minister Tony Abbott and threw shoes at Liberal Party headquarters in a rally against proposed federal funding cuts to higher education.

About 100 student protesters gathered outside parliament house in Spring St before the group marched into the city.

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Some protesters chased Treasurer Joe Hockey who appeared on Spring Street around lunchtime.

The protest was organised by the National Union of Students, whose members recently sent hundreds of angry emails to Education Minister Christopher Pyne.

"Five people have been arrested following a protest in the CBD this afternoon," Victoria Police spokeswoman Natalie Webster said.

"Approximately 50 to 100 people marched through the CBD, stopping to protest at several sites including Parliament House, the State Library, a political party headquarters in Exhibition Street and ending at RMIT University.

"Police attended to ensure the safety of all involved, and provided an escort to persons entering and exiting the building.

"It's alleged several police members were assaulted during the incident, including one member who was allegedly punched to the face by a protester.

"He is currently receiving treatment in hospital for minor facial injuries.

"It's alleged some protesters also threw shoes and chalk at police and burned items in the street.

"Three men and two women are currently in custody and are assisting police with their inquiries.

"The protestors have left the street however police continue to monitor the situation.

"The investigation into the incident remains ongoing," she said.

First Nations Students Officer at La Trobe University Jay Wymarra said he was arrested and charged with arson for burning a cardboard cutout of Abbott.

"What they did was arrest me, shove me to the ground, put their knees in my neck and drag me away from the protest as far as they could," he said

"We as students will not stand for this," he said

"We are not going to be told what to study, we are going to take a stand against it.

Mr Wymarra said the police were heavy handed

"It was all for perfectly peaceful means," he said.

"We were trying to voice our opinions. They (the police) attacked us."

He said the students planned more demonstrations.

Matthew Lesh of the Australian Liberal Students' Federation condemned the disruption.

"They have every right to protest calmly and peacefully, but today's violence and disruption is despicable, and certainly does not represent students," Mr Lesh said.

"Students who are concerned about their education are busy studying today, not playing games, disrupting traffic, wasting police time."

The dramatic protest comes during a busy university exam period.