Tough new rules on student asylum seekers could rob colleges of enrolments and thousands of pounds in cash. Admissions tutors are already worried about making up numbers this term because of changes in asylum rules.
Under the Asylum Bill only asylum-seekers who apply for refugee status within three days of arriving in this country can claim income support and have their fees subsidised by the Further Education Funding Council.
Now the Government plans to introduce another measure which could eliminate more of these students from education.
Present rules consider that asylum seekers who have waited for more than three years are "settled" and eligible to have their fees paid as if they were home students. The new proposals aim to stop this so that from next year no student subject to immigration restrictions will be eligible to claim fees. This means some asylum-seekers will be in this country for four or more years without being able to afford English lessons.
Refugees and those with exceptional leave to remain will be unaffected. But grey areas remain for European migrant workers, British nationals who have lived abroad and holders of valid work permits, who can only apply for settlement after four years.
David Hudson, national policy advisor for the Refugee Council, said: "College and admissions staff are now being involved in immigration controls and checking whether people have the right papers."
Complicated rules for categorising overseas students, who can be forced to pay higher fees, already cause colleges confusion. If a college defines a student as home-based and FEFC auditors disagree, it will be forced to make up the shortfall in funding. Alternatively, it risks losing students by categorising them as overseas and asking for fees they cannot afford.
All colleges are allowed to waive or reduce fees for overseas students in cases of particular hardship but this means forfeiting income.
Many colleges have only recently identified these problems because of stricter monitoring. The FEFC admits that there is no established interpretation of "ordinary residence" which is the key to defining whether a student is home or overseas.
Anne Constantine, assistant principal at Wakefield College, said the college was now asking the Home Office for advice because guidance from both the FEFC and Department for Education and Employment was unclear.
She said: "We are very concerned that there may well be a group of very needy students in our communities who may not be eligible for English language programmes in colleges."
The Commission for Racial Equality and the British Refugee Council are both in the process of preparing guidance on the issue.
Some colleges are now asking all students to produce copies of their passports on enrolment but this raises problems since many home students have never travelled abroad and therefore have never needed one.
Mr Hudson said: "This raises all sorts of race relations issues because colleges may just be asking for passports from people who look foreign."