Darkness has a post on this, in which he attacks NZUSA for wanting a return to state-funded tertary educationa nd universal student allowances. Unfortunately, his argument is centered around a specious claim that a return to state-funding means a return to the days when "university was where rich, white boys went to smoke pot and chant socialist slogans". This isn't necessarily so.
He also attributes the dramatic expansion in tertiary study since the 90's (and the resulting expansion of opportunity) to the loan scheme, which seems to be getting things arse-backwards. What really happened is that the government decided that it wanted far more people to go to university; it (or rather, the business interests directing government policy at the time) also decided that it did not want to pay for the extra places through taxation. The solution was to cut funding per student, and make up the shortfall through fees. The student loan scheme was simply the vehicle by which this shortfall could be temporarily covered, not a causal factor.
What NZUSA is advocating is a return to full state funding, without any decrease in the number of places funded. I'm not sure that this is achievable (my back of the envelope estimate is that it could cost up to half a billion dollars - but then, we're stashing three times that much away for future superannuation costs, so it is really just a matter of political will), but its no worse than advocating for world peace, human rights, or an end to taxation and welfare.
As for student allowances, I am in favour of a universal allowance mainly because I do not think that anyone in this country should have to borrow to eat (which is the situation for many students now). If the cost of doing so is subsidising a few people who could otherwise get the money off their parents, then so be it. But the current system cannot be allowed to continue.