Colleges and refugee education groups are warning that people arriving in Britain who would once have had access to a college course to learn English and find their feet in a new country will not be able to afford to pay their own way, as new rules demand.
The Further Education Funding Council, which will not be permitted to refund colleges for educating asylum-seekers denied benefits, acknowledges it can find no way round the changes.
If colleges, particularly those in inner London which enrol high numbers of asylum-seekers, want to continue offering such courses they will have to dip into their own funds to do so.
The situation is causing such concern in the capital that Southwark College has this week linked up with the Association for Colleges to clarify the implications of the new rules. The imminent benefits changes will be compounded by the effects of the Asylum and Immigration Bill which proposes further reductions in the welfare entitlements of asylum applicants.
The social security changes, which come into force on February 5, will deny benefits to new asylum-seekers unless they apply for the status as soon as they enter the country.
Those who do not apply on entry - often because they fear detention - or who appeal against a refusal of refugee status, will no longer be able to claim income support, housing and other benefits.
That means they will also lose the right to free college courses, since only benefit claimants can have their fees waived. Instead, asylum-seekers will be treated like other foreign students, and will be expected to fund their own study.
The Refugee Council, which has led attempts to ensure asylum-seekers still have access to help after February 5, estimates 10,000 refugees will be affected immediately the new rules come into force.
World University Service, a London-based organisation providing education advice and information to refugees, is also raising the alarm.
Project co-ordinator Hernan Rosenkranz said: "Education plays a crucial role in the effective resettlement of refugees in this country. Practically all refugees have to engage in some form of study if they are to find employment at a later stage."
Since changes in benefit rules were an "attack on the very survival of asylum-seekers", which would throw many new arrivals on the mercy of charities, study would be pushed even lower down the priority list, he said.
"This is a horrendous situation which will compound their social isolation and communication difficulties."
WUS has met London further education colleges including Hackney to discuss the implications of the benefit changes. While colleges were highly sympathetic to the plight of asylum-seekers, they were unlikely to have the reserves to fund courses themselves, said Mr Rosenkranz.
Training could also be hit by the benefits changes, the organisation is warning. Even if asylum-seekers are allowed to take part in Government schemes such as Training for Work - still a grey area - they will lose entitlement to benefits.
A spokesperson for UKCOSA, the Council for International Education which works to promote and protect the interests of students coming to the UK from abroad, said colleges would not feel the effects of the changes straight away because existing asylum-seekers will not be affected.
But he added: "Once people start being denied benefit, that is bound to have a knock-on effect on student numbers, which could perhaps mean staff redundancies."
Dorothy Jones, newly-appointed principal of Southwark College, said many London colleges had a long history of providing education and training for asylum-seekers. She said: "We are all looking for clarification on exactly what the implications of new legislation will be. This is a matter of great concern for us all." Results of the Southwark-AFC project are to be distributed to all colleges.
Tony Cisse, student welfare officer at Lambeth College said colleges were hampered by confused information on exactly how the rules would apply. Lambeth, with more than 500 asylum-seeking students, is considering offering hardship fund cash to some of those hit by the changes.
A social security department spokesman said: "It is expected that once the asylum claim process is complete those who have been turned down will make arrangements to leave the country."