Students can expect no more money from the government's review of undergraduate support, education minister Margaret Hodge said this week.
Whatever extra there is for higher education will be ploughed into universities to support teaching and research, Ms Hodge said.
On Monday, Ms Hodge told student union leaders at University College London that, although the review might shift the balance between state and private contributions, she did not think it should increase the total amount of funds available.
The president of the National Union of Students, Owain James, said: "If Margaret Hodge's response to the UCL students signifies a new policy - that there will be no more money for students - the government should make that clear now. If it is not going to increase the amount available for students, it will not solve the problems of debt aversion or the problem of student hardship."
Simon Luscombe, finance and administration officer at the UCL Union, said:
"The problem faced by many students is that they simply do not have enough to live on. They are forced to work during term-time, which means they end up with poorer degrees or they drop out."
Education secretary Estelle Morris is leading the cross-departmental review of undergraduate support. She has admitted that there is a risk that the system of upfront fees and loans might deter the poor. She has told The THES that this is a risk she is not willing to take in her pursuit of the 50 per cent participation rate set by Tony Blair in 1999.
Several models are being considered, and a proposal is expected in the new year. A spokeswoman for the Department for Education and Skills said no decisions had been made on student funding. The DFES favours a return to some form of grant that is available to all or is targeted at disadvantaged students. Upfront tuition fees would go, and a graduate contribution would fund the system.
But sources say the Treasury is reluctant to back a policy that would require it to pay for grants until graduate contributions had built up. Many in Downing Street also fear the possible electoral effects of a graduate contribution that looks like a tax. As a result, the Treasury seems to favour a system financed by charging higher interest on student loans, possibly the same rate at which the government borrows money.
Although the review's focus is higher education and student support, the government's underlying aim is to put more people in a postion to benefit from higher education. It is becoming clear that further education will be expected to play a larger part. On Tuesday, at the launch of the Learning and Skills Reserach Centre, Ms Hodge said: "The role of further education in delivering more of the higher education will be crucial."
The government wants to redefine higher education to include aspects of further education. The scope of the change is as yet unclear. Members of the education and skills select committee were warned this week that it would be a tactical mistake for the government to focus on support systems for higher education students while ignoring college students.
Paul Mackney, general secretary of the lecturers' union Natfhe, said: "One of the major keys to hitting the 50 per cent target in higher education is further education. Forty per cent are going through to higher education."
As a whole, further education colleges recruit proportionately more people from socially disadvantaged backgrounds than universities. Mr Mackney called for more financial aid for college students and for more academic support, which he linked to motivating staff by paying more and ending casualisation. He said core funding cuts had undermined the recent expansion in further education.
David Gibson, chief executive of the Association of Colleges, called for loans for further education students. Speaking to the committee, he said it was unacceptable that far more hardship support was available for students in higher education than for those in colleges.
The AoC also said that although overall further education funding had grown since 1998, much of this was in the form of blocks earmarked for specific purposes.
The AoC is also alarmed by the growth in bureaucracy and associated costs since the Learning and Skills Council took over funding and planning of the sector in April. John Brennan, the association's policy chief, told MPs that the LSC's central operating costs were £188 million this year and would rise to £193 million next year. This compared with total operating costs of £150 million for the Further Education Funding Council and the training and enterprise councils.