The cost of student allowances rose by nearly a third last year, pushing spending above $500 million.
The Government's limits on tertiary enrolments are designed to keep a lid on the cost of student loans and allowances.
Last year, however, the number of people receiving allowances leapt from 65,700 to more than 82,600.
Ministry of Education commentary on the figures blames increased unemployment in the recession for pushing more people into tertiary study.
The ministry says the Government also relaxed allowance rules, making more people eligible for them.
Tertiary Education Minister Steven Joyce told Morning Report student numbers are likely to fall next year, due to changes to eligibility for student loans, new performance requirements for loans and the fact that New Zealand is emerging from the recession.