The Government says the student allowance will not be reinstated, despite warnings the cut is deterring students from doing postgraduate study in psychology.
The Psychology Society and the College of Clinical Psychologists say there is a growing shortage of practitioners.
From this year postgraduate students aren't eligible for a student allowance, which is $10,868 a year.
But Minister for Tertiary Education Steven Joyce said the students were still eligible for student living costs, which had to be repaid.
He said once people had achieved their first degree they would earn significantly larger sums of money than people who did not go to university at all.
Mr Joyce said the rates for clinical psychologist were high and that they were able to pay off a student loan, so there could be greater focus on giving allowances to young Maori who wanted to go into tertiary education.