About 200 university students are blockading a central Auckland intersection to protest against changes to student loans and allowances in the budget.

The protesters, many with banners and signs, have used rubbish bins, overturned skip bins, wooden pallets and cones to block off the intersection on Symonds Street, near the University of Auckland.

About eight students have climbed a university building and have hung a banner from it.

Police are monitoring the situation and a number of security staff are also keeping watch.

Sections of Symonds Street and Grafton Road have been closed to traffic and buses are being diverted around the protest.

As peak hour approached, police and Auckland Transport are warning there will be delays and bus services could be disrupted for several hours.

Tertiary Education Minister Steven Joyce says that those with student loans will have to repay 12 cents in the dollar, up from 10c, on earnings over the repayment threshold.

The voluntary student loan repayment bonus is to be scrapped.

Access to student allowances is also going to be restricted and post-graduate students will no longer qualify for them. The changes were signalled ahead of the budget.

One young National supporter, who spoke to the crowd in support of the measures, was booed.

Laura, a first year psychology and law student, said she is worried about how she will support herself in her final years of study if she can't get the allowance.

The changes don't make a good impression on first year students, she said.

"It will put people off studying."