University leaders have made a proposal to the Government to either bring back interest on student loans or increase fees by 10%.
Student loans were made interest-free by the previous Government.
Otago University vice-chancellor David Skegg says a small amount of interest should be added to student loans so the Government can increase funding to universities.
Vice-Chancellors' Committee deputy chairman Derek McCormack says overseas universities which compete for academic staff, post-graduate students and international students are better funded.
He says the idea of reinstating interest on loans should be seriously examined, since a small interest charge on student loans could net the Government hundreds of millions of dollars.
The Union of Students' Associations says the Government should ignore any push to reinstate interest on student loans.
Co-president Sophia Blair says interest-free loans make tertiary education more affordable, particularly for under-represented groups, and loan repayment times have been reduced.
The office of the Education Minister, Anne Tolley, says the Government is not considering reinstating interest on student loans.
