In a national day of action, the students held rallies on campuses and protest marches through city streets. They said the protests would be the first in a year-long campaign of action unless the government backed down.
But the government seems intent on pressing ahead with its plans to reduce the current complex range of grants it provides students and to introduce a controversial "work for the dole" scheme for those who drop out.
Under the scheme, it will be compulsory for young unemployed people up to 25 years of age to work between 15 and 20 hours a week on community projects in order to receive social security benefits.
With the proposed common allowance scheme, a standard grant that combines existing payments to students with unemployment benefits will be created. The allowance will be introduced next January and is expected to affect more than 600,000 young people between the ages of 16 and 20, as well as full-time students up to 25.
The government announced the standard allowance scheme last August, saying it would simplify the current range of 13 different payments and would offer greater incentives for young people to continue their education. It would also allow the government to introduce parental means testing of young Australians receiving unemployment benefits.
As well as the new allowance, the government raised the age of independence for students claiming study grants from 22 to 25, thereby reducing payments to thousands of recipients.
The National Union of Students described the moves as an attack on the poorest and most disadvantaged people in the community and typical of the actions of the government and its commitment to reducing public services, no matter what effect it had on those most in need.