New grants for students 'will not help the poorest'

Gordon Brown's plans to give university students hundreds of millions of pounds more in grants will do nothing to help the poorest undergraduates, economists warn.

Ministers hope that a more generous grants system from next year will help encourage more students from deprived backgrounds to apply to university.

But the Institute for Fiscal Studies (IFS) said yesterday that taxpayers' money would be better spent on measures to improve the school results of children from poor homes.

And universities will be worse off under the reforms because they will have to give bursaries to more students, the IFS said.

Ministers announced a major expansion of student grants earlier this month. About 50,000 more students a year will benefit from full maintenance grants worth over £2,800 under the scheme.

And graduates will be able to take a break from repaying their loans for up to five years, to help them buy a house or start a family.

Ministers announced that they would raise the income threshold for eligibility for maintenance grants, which do not have to be repaid.

In future, students from families with a household income of up to £60,000 a year will be eligible for some form of grant.

But the IFS said the very poorest students would be no better off. "The latest reforms only benefit students from families with incomes over £17,500, said Emla Fitzsimons, an IFS expert.

"This clearly stands to benefit many young people on below-average incomes but does nothing to help those from the poorest backgrounds."

The think-tank suggested that the main reason fewer teenagers from poor families than more affluent backgrounds went to university was that many do not get good enough A-level grades.

Haroon Chowdry, a researcher at the IFS, said the most effective way to increase participation in higher education among poor children "is to improve their academic results in school. This is not an easy task, but taxpayer resources would be better spent trying to solve this continuing problem".

The IFS said graduates will gain by about £850 if they take their five-year repayment holidays early in their careers.

The extra grants, which will be available to students starting university next year, will cost over £400m when they are fully in place.

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