Restricted by government limits on their course fees, New Zealand's universities are looking to increase their income from student service levies.

The increases will provide only modest sums for the universities, but occur in an environment where the government sets maximum fee levels and allows increases of only 5% per year for fees below the maximums.

The New Zealand Union of Students' Associations said it was not surprised by the spate of levy increases, which university councils say will free up core government funding for staff and research.

The increases began when Christchurch's Canterbury University announced in July it would raise its levy from NZ$85 to NZ$600 (US$61 to US$427). Waikato University in Hamilton later announced it would increase its NZ$100 levy by 40%, while levies at Massey University stand at NZ$200 - almost double the previous year's rate.

The capital's Victoria University had yet to announce its fees for next year, but vice-chancellor Pat Walsh told students earlier this month that they could expect a "substantial" increase in levies.

NZUSA co-president Jordan King said the levies were unfair to students but acknowledged the universities' situation was "not healthy".

Student unions had an obligation to stick up for their members but understood the pressures on institutions, he said.

The government had increased core funding slightly to match inflation, but that had been mitigated by decisions to scrap additional funding streams which had helped pay for staffing costs.

"It's not a very rosy picture for the tertiary sector and it looks like that burden's going to fall increasingly on the backs of students," he said.

Canterbury's vice-chancellor Rod Carr defended his university's increase, saying the levy would reduce the university's spending on student services and facilities and focus core government funding on research and teaching.

Students were getting a "crap deal" due to under-funding but the university had an obligation to protect the quality of its teaching, he said.

However Minister for Tertiary Education Anne Tolley said there was "no strong evidence" universities were under-funded.

She said universities' revenues had increased in recent years and while student subsidies had decreased for some universities, performance-based funding such as the Performance Based Research Fund made up for most of the loss.

Some universities might be facing funding pressures, but this resulted from management behaviours rather than student demand, she said.

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