Students in higher education at colleges have an average of pound;2,300 less debt than those at universities, an official study of student finances has found.

Despite typically receiving less money from their families, shorter courses at colleges mean students leave owing less, the Department for Innovation, Universities and Skills reported.

While university students owed an average of pound;8,857, FE college students were less likely to take up student loans and had borrowing levels around pound;6,515.

The news will come as a boost for colleges’ plans to expand their higher education provision and to win their own degree-awarding powers, which colleges say would cost government and students less than traditional university degrees.

David Collins, president of the Association of Colleges, said: “We have been saying for some time that higher education in colleges represents both excellent value for the Government and for individual students. More colleges are keen to expand their HE work, and this clearly strengthens the case for more money to be focused on them.”

FE Focus reported last month how colleges were beginning to win more funding for HE than some higher education institutions, as Newcastle College overtook Chichester University and 30 other institutions.

Plans for further increasing higher education in colleges revolve around bids to win powers to award foundation degrees independently from a university, or to create a new Bachelor in Vocational Studies. The relative economy of two-year college degrees is seen as an important selling point.

College students on average received pound;1,237 a year less from their families than students at universities in England. Students’ incomes in both FE and HE, at around pound;10,000, were similar, but those at colleges made up the family shortfall with more paid work, which almost doubled the pound;2,068 that university students earned.

However, the need to work may affect the quality of their studies. Half of part-time students and a third of full-time students in all institutions said work during the academic year conflicted with their education. Less time for reading and greater stress from juggling work and a degree were the main factors blamed by those who felt their studies had suffered.

The National Union of Students said a quarter of full-time students reported that fears of debt nearly prevented them from studying in higher education at all. The union is calling for a national bursary scheme to allow poorer students to make a free choice about the institutions they apply to, without fearing the cost or levels of support.

Wes Streeting, the NUS president, said: “It is not acceptable that a third of students have to base their decisions about which university to attend or which course to study on the amount of financial support that will be available to them.

“We need a national bursary scheme, so that all financial support is based on how much a student needs it, not where they happen to be studying. We cannot leave this in the hands of individual institutions any longer.”