A student scholarship fund described as a "vital life line" and created to help poor students reach university is to have its funding slashed by £100m, George Osborne announced in his annual spending review.
The National Scholarship Programme was launched in response to fears higher tuition fees would deter less financially able students from applying to university. The scheme will now essentially be redundant for undergraduates, and instead provide support only for postgraduate students.
The programme, which offered fee waivers and cash bursaries of up to £1,000 a year to 50,000 students from poorer backgrounds, was praised by Vince Cable earlier this month, calling the scheme "encouraging".
The National Union of Students (NUS) says Osborne is "turning his back" on students who cannot rely on their families for financial support. As of 2015, the scheme's funding will be cut from £150m to £50m. The money was due to be matched by universities, meaning students are effectively losing out on £200m a year.
Toni Pearce, NUS president, said: "By committing the government to taking money out of students’ pockets through cuts to Nick Clegg’s National Scholarship Programme, George Osborne has turned his back on those for those who are not able to rely on financial support from their families.
"The Chancellor has shown a casual disregard for the realities of students’ lives, at a time when more than half worrying not being able to meet basic expenses like food, rent and heating and facing an £8,500 shortfall between the rising cost of living and available financial support.
"Student support is not a prize for getting into university, it is a vital lifeline for students that can be the difference between getting a degree or dropping out. The fact that unscrupulous loan sharks are preying upon students shows how serious the financial problems of many have become, and today’s announcements stand to make that worse, not better.”
The department insists the higher tuition fees have not deterred poorer students, despite warnings from the Office for Fair Access (Offa) they may be excluded from university.
The University College Union's president Simon Renton said the programme had been "widely regarded as a sweetener to get Liberal Democrat MPs to back higher tuition fees".
"Put simply, today is another dark day for students under the coalition government," he added.
A spokesperson for the BIS said the government believes "all those with the ability should have access to higher education, irrespective of ability to pay".
"Our reforms mean responsibility to widen access to HE for undergraduates has shifted from government to universities, which are now well funded to do this. Universities are increasing their investment in widening access by £100m over the next four years, to reach £670m in 2016/17.
"This means the government is able to refocus the National Scholarship Programme on supporting people from less advantaged backgrounds to access postgraduate study, which is where it is most needed."
Offa has been contacted for comment but has yet to respond.