Hundreds of European Union students living in the UK could qualify for maintenance grants and loans following a preliminary ruling by the European Court last week.
Local education authorities will in future have to judge more carefully whether such students have legitimate claims to public support if, as is expected, the judgement is confirmed by the EU in the spring.
The ruling is a consequence of EU discrimination laws now extending to education. It means that public bodies cannot simply turn down grant applications from students from another country. But students from outside the UK will have to demonstrate a link with the UK to qualify for support.
The ruling emerged last week in the case of a French student, Dany Bidar, who applied to Ealing Borough Council for funding when he enrolled at University College London in 1998. Mr Bidar was refused a maintenance loan because he was not "settled" in the UK, despite completing his secondary schooling in London. He claimed the council had breached his rights as an EU citizen.
Ruling in favour of Mr Bidar, Leendert Geelhoed, an advocate general at the European Court of Justice, said that "assistance with maintenance costs for students attending university courses either in the form of subsidised loans or grants" is now covered by rights banning discrimination on grounds of nationality.
Mr Geelhoed said that national rules on such grants and loans must be "unrelated to the nationality of EU citizens", although there must be a "real link between an EU citizen applying for such assistance and the national education system and society".
The ECJ takes the same line as its advocate generals in the majority of cases. ECJ rulings are precedents across the EU, overruling national courts.
Catherine Fawlk, a public law expert at specialist education law firm Mills and Reeve, said that the decision is likely to lead only to a small proportion of grants and loans being awarded to the estimated 50,000 EU students in UK universities.
She said: "I don't think there will be floods of extra applications.
Students will still have to establish a substantial link to the UK to be able to have access to a loan."
Ms Fawlk said that local education authorities will need to look again at eligibility criteria when granting loans and to scrutinise individual applications to ensure the criteria are applied fairly.
The Department for Education and Skills stressed that the latest opinion was "not binding" and it would await the definitive judgement next year.