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Education

Govt funding error leads to student grant cutback

29/10/2008

Tens of thousands of students will be worse off after a government funding error led to cuts for middle-income students.

Innovation, universities and skills secretary John Denham announced in a written statement to parliament that student support for middle-income children will be cut from 2009 as part of the Department for Innovation, Universities and Skills' (DIUS) response to a £200 million overspend.

In July 2007 it was announced students coming from a family with an income of between £25,000 and £60,000 would be eligible for the full grant of £2,700.

Then the government wanted a third of students to receive the full grant and an additional third to receive partial grants. Because of failed projections, however, it is now expected 40 per cent of students will be eligible for the full grant.

Mr Denham has opened up an additional £100 million to help cover this. He has been forced to cut the £60,000 threshold back to £50,020, however.

As a result an estimated ten per cent of all students will be affected.

"The full annual impact of these changes will reduce the cost pressure by £100 million," Mr Denham said in the statement.

"For the rest of this spending review period it will be necessary to make incremental adjustments to the Department for Innovation, Universities and Skills (DIUS) budget, which totals over £20 billion."

The DIUS hopes to release £1.5 billion of cash-releasing efficiency savings but Mr Denham said he would also use its unallocated provision to pay for the additional £100 million.