Several rallies have been held across the country
The rally in Trafalgar Square was organised by the National Union of Students (NUS) to urge the government to abolish tuition fees and introduce targeted maintenance support.
Speakers included the leader of the heads of universities in England, Professor Roderick Floud, and NUS President Owain James.
Addressing the rally, Mr James said: "The government has promised it would look at student funding again.
"But recent reports show that it is actually considering things which would make the situation worse, for example commercial interest rates on student loans."
If the government wanted to achieve its objective of a 50% participation in higher education, it would need to give more money to students, he said.
Support
"Unfortunately the current system is repressive. The poorer your background the more debts you have on graduation."
The average student would graduate with debts of more than £12,000, an increase from about £5,000 in 1997, he added.
"The government gives an extra student loan allowance for London, but this is not even enough to cover the average difference in rent," he said.
"Now 90% of students work during the year. For some this is a few hours a week, but for others this really affects their studies."
Mr Floud said it was not possible for students to get the best out of university if they were working long hours to support themselves.
'Untenable'
Other speakers at the rally included Liberal Democrat MP David Rendel and the political editor of Mirror Group Newspapers, David Seymour.
Comedian Ed Byrne was also among the speakers.
He said: "I was studying at Strathclyde University in Glasgow but I had to drop out because of debts.
"I still had financial support from my parents but it just became untenable for them and myself."
The rally is one of several to be held by students across England and Wales in the past week to campaign for an improved package of student funding.