Apprentices who have yet to complete their qualifications stand to lose thousands of dollars in an axed tax-free cash payment that will be replaced by a HECS-style loan from July 1.

Thousands of apprentices eligible for the federal government's Tools for Your Trade payment, worth up to $5500, have been told they will not get future instalments and can instead apply for the newly introduced Trade Support Loan.

Disappointed: Apprentice chef Alex Martin will miss out on her last two instalments. Credit:Sahlan Hayes

Students close to finishing their apprenticeships are furious that the payment, which helps with training costs and is paid in five instalments during an apprenticeship, will not be honoured.

Alex Martin, who is due to finish her chef apprenticeship in October, will lose $2700, as will her classmates at Ultimo TAFE.