Young people will be discouraged from studying at university if the recommendations contained within the federal government's Commission of Audit report are implemented, according to the Wollongong Undergraduate Students' Association (WUSA).
Under the recommendations, students would have to pay more for their degrees and repay their loans sooner.
Annual minimum wage cases would also be abolished, making life hard for students already struggling to make ends meet, according to WUSA president Mitchell Bresser.
"I think a lot of their recommendations are incredibly unfair and short-sighted," Mr Bresser said. "I think it's terrible for fees to be increased - it's increasing the disincentives to acquire tertiary education."
Mr Bresser said the recommendations, if implemented, would have a particularly negative impact on students wanting to study courses which would train them for low-paying jobs, such as nursing.
"It's likely courses that cost a lot for the university to run and provide a benefit to society will see a decrease in enrolment numbers," he said.
Meantime, Member for Throsby and assistant opposition health spokesman Stephen Jones said there was nothing in the Commission of Audit report for the Illawarra or regional Australia.
Under the recommendations, unemployed people between 22 and 30 would be required to move to areas of higher employment after one year or surrender the dole.
Latest data has youth unemployment in the Illawarra sitting around 20 per cent.
Mr Jones said the government should "give up" if it was turning its back on places like the Illawarra.
"There's nothing in this report which is good news for the Illawarra," Mr Jones said. "It was an opportunity for them to talk about regional Australia - instead there's a deafening silence, just cuts to programs and nothing in its place."