Thousands more students in England are to be entitled to maintenance grants, the Government said today, under a £400 million drive to boost the number of young people entering higher education.

John Denham, Secretary of State for the newly-formed Department of Innovations, Universities and Skills, said that he was raising the income levels for eligibility for maintenance grants, so that two-thirds of students in the country would receive financial aid.

From next year students from families with household incomes of up to £25,000 will be eligible for a full maintenance grant – an increase on the current threshold of £18,360. The move is expected to entitle 50,000 more students per year to the full grant, worth £2,825, and means that a third of all students would receive it.

Speaking in the Commons, Mr Denham added that those whose families had incomes of up to £60,000 a year would also be eligible for some form of grant in the future, paving the way for partial support for more than 100,000 extra students – including those from middle-class backgrounds.

Mr Denham also announced that graduates will be entitled to take a break from repaying their loans for up to five years, to help meet the costs of buying a home or starting a family. “This will help graduates make flexible choices over their finances at key points in their lives and careers,” he said.

In his first statement to MPs since taking up his newly-created post, Mr Denham said that the extra grants, available to those starting university next year, would cost more than £400 million per year.

“We are wasting the talents of too many young people for whom university study should be a realistic ambition, not out of reach,” he said. “Hard-working families on modest incomes have concerns about the affordability of university study.”

The government has set a target of getting 50 per cent of 18 to 30-year-olds into higher education by 2010. Since 2006, students have faced tuition fees of up to £3,000 per year, covered by a loan which can be repaid after graduation.

Mr Denham also announced that 16-year-olds who are studying for A-levels and receive education maintenance allowances will be guaranteed some form of financial support if they decide to go to university, in order to encourage more teenagers from poorer backgrounds to consider applying for degree courses.

Mr Denham told the Commons: “These reforms promote aspiration, offer opportunity, provide support to students from hard-working families.

“They promote the world-class standards of our colleges and universities and they help deliver the skills and knowledge that business and society need in a global economy.”

David Willetts, the Conservative spokesman for universities, said his party welcomed measures that would improve access to higher education but it was a “pity” there were now two different Government ministries to oversee some of the measures. Upon Gordon Brown’s appointment as Prime Minister, the Department for Education was split into the Department for Children, Schools and Families (DCSF), and the Department of Universities.

University leaders welcomed Mr Denham’s announcement. Professor Drummond Bone, president of vice-chancellors’ group Universities UK, said: “This is excellent news - for students, for graduates, and for the whole higher education sector.

“This extra money will tackle head-on any perception that financial barriers make it impossible to go into higher education. Raising the threshold will mean many more students will be eligible for non-repayable grants - and will go some way to ensuring that all students with the ability to succeed in higher education are given the opportunity, and the means, to do so.”

Sally Hunt, general secretary of the University and College Union, said: “We are pleased the Government has recognised the struggle many students and their families have trying to make ends meet whilst at university. Making more students eligible for maintenance grants will hopefully prevent students from having to stack shelves or flip burgers when they should be in lectures and seminars.

“We hope the Government will not make life harder for new graduates when it considers what to do with the current loan repayment agreements. Increasing the amount of interest students must pay on loans will further exacerbate the problems they currently face regarding buying a first home or starting a pension.”

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