Labour health spokeswoman Annette King received a petition earlier on Tuesday from New Zealand Medical Student Association president Mike Fleete calling for student loan caps to be removed.

Tertiary Education Minister Steven Joyce has backed down on a 7-year cap on student loan borrowing on the same day medical students turned up to Parliament with a petition calling for it to be scrapped.

The policy, introduced in 2011, was designed to encourage students to get through their study in a reasonable amount of time but has seriously impacted on medical students who often take 8 or 9 years to complete their study.

Following a last minute meeting between Joyce and the New Zealand Medical Student Association (NZMSA) on Tuesday, Joyce announced students studying long undergraduate programmes would be able to apply for an additional year of student support.

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This covers students studying medicine, optometry, dentistry and veterinary science and provides access to a student loan for 8 full years of study.

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In addition to that graduate-entry medical students will be able to be paid the Medical Trainee Intern Grant as a lump sum at the beginning of their final year to help cover fees. Previously the grant was available only as a monthly stipend.

ROBYN EDIE/FAIRFAX NZ Tertiary Education Minister Steven Joyce says he never suggested he wouldn't relax rules on a student loan cap.

"Together these two changes we announced today will greatly reduce the effect of the student loan limits on graduate-entry students," Joyce said.

But NZMSA president Mike Fleete said there were still a number of students who wouldn't be eligible for a student loan for the full length of their studies and it was "unfortunate they would fall between the gaps".

Fleete said it seemed "half-baked" to relax the policy for one year but not just exempt students all together for highly-skilled courses.

"About five to 15 students still won't be covered under this change each year. Those are students who do research before studying medicine and they won't be covered because it takes them longer."

While he said five years of lobbying had paid off for most students, "it's really important we get people with research backgrounds through medicine and unfortunately this will probably stop them".

On top of that students who did a bridging course or had to repeat a year would also not qualify for the extra year of student loan under the changes, which only applied to graduate-entry students.

Joyce said there was a limit and the policy change had been extended to take into consideration those who entered medicine at graduate level.

"I'm sure they'd like (student borrowing) to go on for a long long time...but just remember that 40 per cent of every student loan is written off by taxpayers, many of whom don't get the opportunities that our medical students do when they become doctors," he said.

Earlier on Tuesday, Joyce disputed saying he wouldn't reconsider relaxing rules for medical students.

"What I've said is I'll keep monitoring it and if I felt something needed to happen then we would act."

"We've given some thought to that - watch this space, Christmas is coming."

That directly contrasted the message sent to the NZMSA, who presented a petition of almost 21,000 signatures, to Parliament today.

Former NZMSA president Michael Chen-Xu said he had engaged with Joyce for five or six years and despite questions asked in Parliament and written questions, the response from Joyce has always been, "no this isn't a problem".

The New Zealand Young Nats welcomed Joyce's move to extend the cap on student borrowing.

"I'm pleased that the minister has listened to the voice of students and recognised that this is a valuable investment. Medical students should be able to finish their degrees with the same support as students who get qualifications in other subjects," Young Nats president Joel Rowan said.

Labour's health spokeswoman Annette King said she was delighted for the students and it was a "back-down" by the minister, who said for many years there was no need to change the policy.

"There will be students who do miss out still and they're worried about them. But it's not only medical students and dental students and so on. There's also students who take on PHDs."

"The Government's obsession that people doing this level of education are going to be skivers - there's no evidence of that at all."

She said it was a "knee-jerk" reaction to the lobbying of medical students.

Both Auckland University and Otago University medical schools reserved 30 per cent of places for students who had already completed a degree to ensure older students took up medicine.

Under the policy change at least 150 medical students would have to self-fund one to two years of study and King had encouraged the students affected to put together a petition demanding a review of the policy.

Joyce said overall the policy worked well but for a small group of people it was "challenging".