The head of Otago University's student association says reintroducing interest to student loans is a silly idea.

A Productivity Commission report said the government misses out on around $600 million a year in student interest.

But OUSA president Hugh Baird said it would be a significant barrier for students.

"To put interest on student loans would be an incredibly unwise move, and would discourage a lot of people from coming along to study at university and getting that better education."

OUSA is also pushing back against calls to change the University Entrance system.

A Productivity Commission report said UE has little or no value, and doesn't signify preparedness for higher-level study.

Tertiary education minister Paul Goldsmith said he's open to changing UE, saying the current requirements are a barrier.

But Mr Baird disagrees.

"That level of entrance there for university is there so that you don't get people going to university and wasting their time and a lot of precious resources."