The government is considering cutting student grants and freezing the number of university places after it drastically miscalculated increases in the bill for higher education, the Guardian has learned.

It would constitute a major U-turn, reversing last year's pledge to raise the number of students eligible for free money while they study and a key policy to boost the number of graduates.

The move, which would apply to England alone, would be fiercely opposed by students and universities, and risks a serious political backlash.

Sources said the problem stems from the rushed creation of the Department for Innovation, Universities and Skills and the sudden announcement of a massive expansion of student grants, within eight days of Gordon Brown becoming prime minister in July 2007. A senior Whitehall source said the plan, which means two-thirds of students are eligible for some kind of grant at the cost of hundreds of millions of pounds each year, was not properly costed, leaving a hole.

The source called the announcement to expand grants "a fingers in the sky" exercise which meant the new ministry was not allocated enough money to pay the grants from the start. Ministers were also caught out by a boom in applications.

For more on this artilce please visit: http://www.guardian.co.uk/education/2008/oct/25/student-grants-higher-education-bill
Source: The Guardian Online