The Policy Studies Institute says funds to support FE students are allocated by accident of geography rather than by any coherent guidelines.

What funds there are fall way below the support available to undergraduates, according to researchers Alicia Herbert and Claire Callender.

The Funding Lottery was commissioned by the Further Education Funding Council as part of efforts to bring more people into education. It said: “Access to financial support for FE students is a lottery. The funds are not distributed in accordance with notions of equity or need. Students in financial need are treated very differently depending on their age, where they live or what they study. Rarely can the financial support be guaranteed or relied upon.”

The report comes as a Government working group, led by Graham Lane, education chair of the Local Government Association, starts an inquiry into student support. Mr Lane is known to favour entitlement to grants for certain types of student or courses.

At present students can get discretionary grants from local education authorities. There are also access funds available from colleges, although these too are small and unevenly awarded.

The institute’s study found almost no British research into the central questions of the effects of increasing levels of student support on recruitment and retention in colleges.

Studies carried out in American community colleges found recruitment was increased by offering financial support.

In America “the studies show unequivocally that financial aid has a positive impact on student enrolment, especially among students from low-income families. Given the evidence from the American literature, it is beyond question that financial aid can widen participation in education, especially among low income groups.”