Parliament has passed legislation making student union membership voluntary.
The bill, in the name of the ACT MP Heather Roy, has been passed on the last member's day of this parliamentary term.
Mrs Roy argues that, consistent with ACT Party principles, tertiary students should be able to choose whether or not to belong to a student union.
She accuses unions of not being representative of the student population and of wasting resources.
The Labour Party was adamantly opposed to the legislation, which it sees as an ideological drive to gut student unions in New Zealand.
However, despite employing delaying tactics in the House for months, Labour's attempts to stave off the third and final reading have now failed.
More student protests at Parliament
There were fresh student protests on Wednesday as Parliament continued its debate on the legislation.
About 200 students demonstrated in the grounds of Parliament in an eleventh hour bid to have the legislation shelved.
New Zealand Union of Students Associations co-president David Do has said the legislation will greatly reduce the funding available for student services.
Students pay about $150 per year in compulsory fees and fear the new law will put welfare, health and other services at risk.
Lincoln University Vice-Chancellor, Professor Roger Field, supports the students' view, saying universities will have trouble finding ways to maintain funding for core student services.