A shake-up of the student finance system in Wales will see all students get £1,000 a year before a means-tested grant to help with living costs.

Currently, Welsh students receive a tuition fee grant of £5,100 which means that compared to English students their student loan balance at the end of university is a lot lower - on average the loan balance for Welsh students who started repayments in 2015/16 was £16,120 compared to £24,640 for English students.

The move has come as a results of a review of student funding published in September, which argued that the current regime – which has protected Welsh students from the imposition of £9,000 tuition fees and loans since 2012 – failed to directly help those from the worst-off households. Students find everyday living hard, with maintenance loans sometimes not even covering a student’s rent, so receiving more money as a student would be more beneficial than paying less back in the future.

Because of this, they are to scrap the tuition fee grant which will be replaced by a maintenance grant of just over £8,000 for students from the most disadvantaged families. As before, course fees will be paid back with a loan which students will repay once they have graduated and started earning more than £21,000.

Including the £1,000 grant for everyone, it is thought that a student from a family on an average income will receive an additional £6,000 to help with living costs while the most disadvantaged students (from families who earn less than £18,370) will receive £8,113. This figure is equivalent to the national living wage based on 37.5 hours a week over a 30-week academic year. For families who earn £59,200 or more (approximately 10% of the population), students will receive no additional funding. 

Students studying in London will also receive a 25% boost to their maintenance grant. 

Officials also believe that these changes could save at least £40m by the fourth or fifth year of operation, which would then go back into higher and further education. The existing universal tuition fee grant costs the government about £250m a year and is available to all Welsh students, including those who travelled to other parts of the UK to study. In the new scheme about 70% of students are thought to be eligible for a portion of means-tested grants.

Furthermore, full-time, part-time and post-graduate study will be considered equally in the new proposal and students would have access to similar support. 

This funding scheme will be reading for students starting in September 2018, depending on the government’s consultation, Treasury approval and the ability of the Student Loans Company to administer the scheme.

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Calls have been made for the Treasury to unpick a controversial change to student loans from George Osborne’s final autumn statement, which critics including MoneySavingExpert’s Martin Lewis have called a mis-selling of loans to thousands of young people.

In 2015 a five-year freeze was announced on the £21,000 income threshold at which students loans are to be paid back, despite a pledge when the scheme was launched that the £21,000 figure would be raised each year in line with average earnings.

This means that, on average, a former student will pay £306 a year more in 2020-21 compared with 2016-17.

As Martin Lewis has noted “This is about how young people can trust politics, when people can retroactively change a contract, if they are lied to in contract? It is an absolute disgrace.”

If the government feels they can justify making one retroactive change to student finance without it being looked at by an independent panel, where does it stop? As Wes Streeting, Labour MP and former NUS president in favour of the changes notes: “What’s to stop current or future students finding suddenly the interest rates goes up, or debts aren’t written off after 30 years, like they were promised? If any commercial bank or pay day lender behaved like this there would be outrage and the FCA would be stepping in.”