The "16-hour rule", which restricts the time students can study without losing benefit, should be scrapped, Scotland's Colleges have demanded. It is an "arbitrary" disincentive of no benefit to students, the taxpayer or the economy, the organisation argues.
Its report, Back to Work, says that to avoid being caught out by the rule and losing benefits, students opt for part-time courses - whether that is in their interests or not.
"This means they study over a longer period, which costs more in benefits and blocks off college places to other applicants at a time of huge demand," the report states.
Further education colleges in Scotland enrolled 375,000 students this year, but 35,000 applicants were turned away.
There are 315,000 people studying part-time in Scottish colleges, but it is impossible to quantify those who are forced to do so, because the Department for Work and Pensions does not keep records of how many are claiming Jobseeker's Allowance or other benefits.
The group most affected by the 16-hour rule are older students, who are more likely to live independently, have children or other family members to care for and have higher living expenses. Many older students are also on benefits and so will be worse off if they study full-time.
Linda McTavish, convener of Scotland's Colleges' Principals' Convention, said: "In times of recession, you need an accelerator to get people into the workforce and the 16-hour rule is doing just the opposite."
She added: "We would never advise anyone to come off benefits to study full-time if it meant they were worse off."
The college view is supported by business, students and the unions. Lesley Sawers, chief executive of the Scottish Council Development and Industry, welcomed anything that would remove financial barriers for potential students.
Liam Burns, president of the National Union of Students in Scotland, said "the arbitrary nature of cutting someone off the second they study over 16 hours will make little sense to a student". And Grahame Smith, general secretary of the STUC, said the rule held colleges back from playing their key role in equipping people with new skills.
The report suggests that dispensing with the 16-hour rule could help improve the skills system, which it says resembles an "egg timer" - large numbers of highly-skilled people at the top, a smaller number with intermediate skills in the middle and a bulge of lower-skilled workers at the base.
Scotland's Colleges has a fall-back position if its plea to ministers falls on deaf ears. It urges adoption of the system in Northern Ireland where, although the 16-hour rule applies, students are classed as full-time for FE purposes if they attend a minimum of 15 hours a week for seven sessions over a 30-week period. This allows colleges to be funded to provide the learning and claimants to collect benefits as they are available for work.
The report advocates the piloting of such an approach, specifically targeted at those who would benefit from keeping their welfare payments - the older unemployed, the long-term jobless, those on employment and support allowance and the newly unemployed.
The 16-hour rule was introduced in the UK in 1990 amid fears that the "work shy" could become permanent students. It has been relaxed on several occasions, most notably when MG Rover in the West Midlands collapsed in 2005 with the loss of 6,000 jobs.
As Prime Minister, Gordon Brown promised to scrap the rule, but the move did not materialise. There is now speculation that the current Westminster Government's changes in welfare policy could include its abolition.
STRUGGLING TO STUDY
Michael Craig, 19, is struggling to survive a full-time course in horticulture and garden design at Elmwood College. He receives a #163;30-a-week education maintenance allowance, while still being a full-time carer for his ailing father. He says he is #163;100 a week worse off than before he went to college
Jennifer Scruton, 30, has had to move back in with her parents to afford her one-year course in business administration at Dumfries and Galloway College. "Being a full-time student, I would not be able to claim housing benefit or Jobseeker's Allowance," she says.
Alison Sutherland, 38, who is a part-time student in the first year of an accounting course at Ayr College, says: "If I could keep my benefits and didn't have to go into huge debt, I would prefer to do full-time."
Christine Rodgers, 25, wanted to be a full-time student but has had to settle for a social studies course taken part-time over five years at the City of Glasgow College's Adelphi Centre. She says studying full-time would have meant the loss of her housing benefits; alternatively, she would have had to work full-time to study full-time, and topping up her bursary with a student loan would have driven her deeper into debt with childcare costs. "It's a nightmare," she says.
Robbie Brown, 48, a part-time social science student in a central Scotland college, says: "The system works against me - and against itself. I'd have done the course full-time and been in work next summer, but the part-time course is two years. They are costing themselves money by keeping me on benefits for longer, and delaying the speed I can get into the jobs market".