The federal government announced a 6.1 per cent increase to youth, student and carer payments which will raise fortnightly Youth Allowance payments to between $332.90 and $720.40, and Austudy between $562.80 and $720.40 on New Year's Day.

The Youth Supplement for those on the Disability Support Pension will also go up by between $27.40 and $40.70 a fortnight.

But the boost was "not going to do much" for university students languishing below the Henderson poverty line, National Union of Students (NUS) president Georgie Beatty said.

The most recent rate for the Henderson poverty line - the Australian standard used in social welfare policy - is $616.62 a week for an employed single person.

"While the NUS welcomes these changes ... realistically, it isn't enough," Ms Beatty said.

"We're in a cost-of-living crisis and students are bearing the brunt of it.

"Most of them are working more than one job to keep up with high rent costs and everything that's going up at the moment."

Ms Beatty said she had seen rising living costs push some students into the difficult position of choosing whether to pass their classes or feed themselves.

"They're the ones working minimum-wage and casualised jobs while trying to balance exams and assignments," she said.

"They have to choose whether they're eating or if they pass ... that should never have to be a choice."

She said while NUS was glad to hear federal Social Services Minister Amanda Rishworth's comments on the importance of supporting young people to afford basic living costs while they study, the welfare increase to ease inflation pressures was not a "win".

"This was a dialogue shift which we were happy to see but I think it was disappointing that this was being sold as a win," she said.

"It's just the indexation.

"The federal government must go further to support students."

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Ms Beatty said her student union wanted the Youth Allowance rate to be raised to $88 a day - which would take it above the Henderson poverty line - be indexed more often, and have its age eligibility increased from 22 to 18.

Deakin University Student Association president Georgie Brimer said students deserved to at least have their basic needs met but needed to be comfortable to perform to the best of their ability.

"It's really important for students to - at a minimum - have their basic needs met, but also for them to be able to live somewhat comfortably as well," she said.

Ms Brimer said the rate increase was especially vital for students from rural and regional areas who often have to move away from home to study.

"These are students who can't choose to live at home," she said.

"The majority of people who get youth allowance are living out of home. It is really important for these students in particular."

She said lifting youth payments was timely given the financial hardship she saw many university students endure during the pandemic.

"There has definitely been an increase in students coming on campus to access things like food," she said.

"We gave out things like groceries every couple of weeks (including) fruit and vegetables which I'd never thought I'd see so many students get excited for.

"We saw a lot of students at our survival centres which have basic items for hygiene but also basic study stuff, like notebooks, and clothes."

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