Student support is being reviewed because debt aversion among the poor is jeopardising the government's 50 per cent expansion target, education secretary Estelle Morris admitted this week.
Ms Morris, speaking to The THES before her first big speech to higher education on Monday, said the system, where students graduate thousands of pounds in debt, risked deterring the poorest people in society. These people are the targets of government plans to widen participation.
Ms Morris said that reluctance to get into debt had not been taken into account when the decision was made by her predecessor, David Blunkett, to scrap maintenance grants and introduce tuition fees.
She said that Mr Blunkett was right to change the way student finance was structured because otherwise the government would not have been in a position to achieve its participation target.
"I think it could have worked. On paper, the theory, the way we changed student finance put us in a better position to reach the 50 per cent target.
"Now what I think has happened is that the way we structured it ran a risk of making people behave in a way we did not want them to behave.
"I think what has been a factor is the perception of student debt. We ran the risk of putting off people applying to higher education. We might have (reached the target) but I do not want to run the risk. There was a worry that it would have been a barrier to expansion."
Ms Morris said the review, being carried out by the Department for Education and Skills and the Treasury, was concentrating on the balance between state and private contributions to student support. But she stood by the principle that students should continue to contribute something to their higher education as they were the biggest beneficiaries in terms of increased earnings.
She said: "Maybe we did not get the balance right first time round. One of the things I definitely want to do, and it is one of the things we will be looking for out of the review, is more upfront for students from those (poorer) socioeconomic backgrounds."
The government is considering an end to upfront fees and a reinstatement of some form of grant support. Instead, graduates could have to pay a higher education levy over a number of years.
Ms Morris said that a graduate levy was an option under consideration but she insisted that no conclusions had been reached. The results of the review are due early in the new year.
Any change to the student-support system could require a significant amount of extra money, particularly if some form of up-front grant is to be reintroduced.
And there is concern in universities that this extra money may not be forthcoming from the Treasury but may have to be found from elsewhere in the departmental budget. This could mean that other areas of higher education funding could suffer.
Ms Morris said: "I am not going to say at this stage whether it will cost (more) money or not. It might mean shifting around the money we have got. It might mean finding more money but we are not saying there is £X million more for student support. Part of the discussion we want to have will enable us to cost options."
Ms Morris said that the prime minister and the chancellor were fully "on board" with the need to reform support. She raised the prospect that there might be more cash from the Treasury, saying that chancellor Gordon Brown had been generous to the department in the last Parliament.
The secretary of state acknowledged there was a problem with academic recruitment, which could lead to shortages of lecturers in the next few years. Academic pay was an issue, she said, but there were other issues such as esteem, respect and trust. Ms Morris said there should be greater recognition of those who concentrate on teaching rather than research.
Reducing bureaucracy could also help staff morale. But Ms Morris said this would not be at the expense of quality assurance.
She made it clear that her "bottom line" was that there had to be an accountability framework that necessitated an external inspector. She said peer review was useful if done well but there was the potential for it to become "too cosy".
There was hope for more increases in research funding. Ms Morris said she valued the country's research reputation and wanted to see it maintained.
Ms Morris will outline her vision for higher education to an academic audience at London Guildhall University on Monday.
She is concerned at the failure, despite expansion, to increase the proportion of people from poor backgrounds in higher education.
Ms Morris attacked those who claim expansion results in universities dumbing down. "What they are saying is that black kids are not as bright as white kids and that poor kids are not as bright as rich kids."
* Ms Morris is due to give evidence to the Commons education and skills select committee on Wednesday.