The government have outlined plans to restructure the student grants award system, resulting in a £100 million cut in spending and a cap on the number of new students in 2009.

John Denham, the cabinet minister for innovation, universities and skills, proposed the new plans in a statement published at the end of October. The new arrangements come partly as a result of over expenditure in 2007/8.

The worst hit students will be those from middle-income families as the threshold for a partial grant will be brought down from £60,000, as set by ministers in June 2007, to £50,020.

The move will only affect English students. According to statistics published by UCAS there are around 20,000 English students studying in Scotland.

Mr. Denham explained the cuts: “The family income threshold for a partial grant will be £50,020, which means that all students with household incomes of £18,360-£50,020 will be eligible for higher levels of grant than in 2007/08.”

The current grant system provides two thirds of students with full or partial grants. Under the new plans the poorest students will not be affected. Those affected will see their grants reduced and their loans increased.

According to a recent report by NUS UK, students leave university with debts of up to £25,000 with interest.

The changes could affect up to 40,000 students, as the department for innovation, universities and skills seeks to make up for its financial shortfalls in the last year.

Mr. Denham argued that some students would be better off: “All students with a household income of £18,360-£57,708 will be eligible for a more generous package of grant and loan support than in 2007/08.”

Stephen Williams, Liberal Democrat university spokesman, condemned the plans and accused the government of neglecting students. “As we enter a recession, ministers are going to have to face-up to the fact that more students are going to be expecting to receive maintenance support in the years to come.”

Mr. Denham defended the changes at parliamentary universities select committee: “The key thing is that we are not changing the lower threshold for the full grant. That remains at £25,000.”

The re-structuring comes just over a year since the award system was last revamped.

An aide of Denham’s told The Guardian that the changes were not a result of the current financial climate. “It is untrue to say that this is related to the economic slowdown. The issue arose because we underestimated the number of students who would apply.”

Mr Denham said that the changes would "reduce the cost pressure by £100 million", on an annual basis.

In a bid to further relieve the financial pressure on the department, a cap has been put on next year's growth of student numbers to bring it down from 15,000 to 10,000.

UCAS figures published in October showed a rise in applications to universities, which have increased by 10 per cent compared to last year.

Wes Streeting, president of NUS UK, was sceptical of the plans: “Obviously, it's very good news that more students from lower income families will be going to university. However, the measures laid out by the government to compensate for this will inevitably hit new students from middle income families at a time when they are struggling to cope with the impact of the credit crunch.”

Mr Streeting called for an overhaul of the system: “The Government needs to stop tinkering with grants and fees every year, and recognise that the entire higher education funding system is unsustainable. We need a proper review of the system so that parents and students know where they stand.”