For that rare and much sought-after species, the prospective student from a poor background, it has been a bad week. It may be impossible for middle-class families to imagine, but the Government’s decision to freeze maintenance grants could be the deal-breaker for such a teenager, waiting nervously for A-level results this summer.

That other university farther down the road may not seem as appealing now; in fact, is higher education worth the gamble at all? Every day brings another headline about the vanishing graduate jobs market that will greet the class of 2009, with ten of thousands of destined for the dole.

The failure to increase grants, which help the poorest students with living costs, as a way of reflecting “the current low-inflationary environment” seems a high symbolic price to pay in the social mobility stakes. Often it is perceptions of debt that deter young people from applying to university. The decision also raises some uncomfortable questions. Why does this logic not also hold for tuition fees in England, which will rise to £3,290 a year by 2010-11? After all, university bursaries (financed through fees) have had mixed success in targeting the most needy students. However, if one was to pick an obvious saving that would not further disadvantage the already disadvantaged, it would be to charge real interest rates on student (income contingent) loans. As they stand, these are a taxpayer subsidy for the middle classes, plain and simple.

All this might be, well, academic — given the Government’s decision to freeze university places this year, when demand for places is likely to soar because of the poor jobs market. Some estimate that 60,000 applicants will be turned away from higher education. There is no prize for guessing which students are most likely to lose out in the crush for degree places this August.

The downturn has been a harsh reality check after the bold rhetoric of a White Paper in January that spoke of a “new wave of upward mobility”. The premise for the Prime Minister’s optimism was a growing British economy in the global marketplace, creating more opportunities for all. The fear has to be that, amid a recession, with limited education budgets, university places and job openings, the “arms race” of social mobility could be stepped up. If the postwar boom heralded the golden generation of social mobility, then the post-millennial gloom may usher in the unlucky generation.

Official figures suggest that even in the good times children from poorer backgrounds remained half as likely to attend university as their more privileged counterparts. (And this is likely to be an underestimate, as many students from richer backgrounds opt not to say anything about their parents on application forms, so are missed in the statistics.) The latest figures for the highly selective universities, meanwhile, show that only 16 per cent of new students came from the lowest social classes in 2007-08, a slight drop compared with the previous year.

The real world is likely to offer little comfort for those credit-crunch graduates at the bottom of the social ladder. A number of elite firms are narrowing their pool of potential recruits to graduates from Oxbridge and a few other select universities. This month Alan Milburn’s commission will announce proposals to open up the middle-class monopoly of internships and work experience that shamelessly excludes youngsters without connections or resources to survive low (or no) pay from many of the most prestigious professions. Outside the public sector, however, there are limits to how much the Government can do to challenge the closed culture that transmits privilege from one generation to the next.

Britain’s education freeze could not make for a starker contrast with the country that shares our unenviably lowly standing in the international social mobility rankings — and the pain of a deep recession: the US. If ever there was a statement of belief in the transformative powers of education in times of hardship, then President Obama’s decision to invest $100 billion into education in the stimulus package is it. An important part of this is to boost grants for poorer students (and moves towards real interest rates on student loans).

Some may scoff at the “yes, we can” mantras across the Atlantic, but no one can deny the boldness of the reforms being introduced there. It is early days, but Mr Obama is proving that you can be a popular politician and genuinely progressive in deeds as well as words. The aim of the Obama Administration is to have the highest proportion of college graduates in the world by 2020.

In Britain all the talk is of whether budgets cuts will affect schools or universities most — but there is a radical debate to be had on which cost-effective educational policies may help to improve social mobility even in frugal times. This might include changing the priorities in the education budget, so early years schemes receive as much funding per child as schools or universities, or giving priority to children on free school meals in school admissions, or encouraging universities to identify potential students far earlier in school.

A key strand of that debate should also concern student finance. Higher university fees are a distinct possibility following a government review conveniently scheduled to report after the next election. If we are not careful that rare, sought-after species, the student from disadvantaged circumstances, may become even more endangered, and, among the academic elite, threatened with extinction.

Dr Lee Elliot Major is director of research at the Sutton Trust

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