Welsh vice-chancellors are backing proposals for the Welsh Assembly to seek legislative powers to introduce maintenance grants and bursaries for students.
The "green paper", The Learning Country , also proposes the merger of the Welsh further and higher education funding councils and giving higher education funders a strategic planning role.
The paper, circulated for consultation, sets out proposals and targets for education and training in Wales through to 2010.
It calls for action by the assembly in response to recommendations from an independent investigation group on student hardship in Wales, including a move to gain legislative powers to provide a firm statutory base for students' entitlement to maintenance grants and bursaries.
The group recommends that front-loaded tuition fees be scrapped and that grants be backed up by a contingency fund for learners facing hardship.
The Learning and Skills Act 2000 gave the assembly the power to initiate secondary legislation, but it would need the backing of Westminster to carry forward the proposals on fees and grants.
Derec Llwyd Morgan, vice-chancellor of the University of Wales, Aberystwyth, said: "Fees have been blamed for student hardship but it's the abolition of grants... The government wants us to widen access but it has not allowed enough support."
Professor Morgan said he was against the merger of the councils. He warned against the higher education funding council becoming involved in the "detailed planning of individual institutions".
Keith Robbins, vice-chancellor of the University of Wales, Lampeter, described the current student support system as "a mess".