Global recession and the squeeze on public finances will curtail the SNP Government's cherished ambition to move further along the path from student loans to grants.
A consultation paper on support for students in higher education, issued this week, does not commit ministers to any particular course, instead setting out three possible options. But it seems clear that the favoured option would target resources. The paper acknowledges this would mean "more modest increases in support and, as such, changes would have to be more focused on those with lower incomes".
This plan would involve replacing only the additional loan, which some students receive on top of their general loan, with a grant. It is directed at those whose household income is less than Pounds 21,210 a year, the maximum added loan being Pounds 590 for those with a household income of Pounds 17,835 a year or less.
The Government says Pounds 30 million would be made available in 2010-11 for increased student support under its plans. This would allow students on these additional loans to replace their Pounds 590 loan with a grant set at a maximum level of Pounds 1,200 for those on the lowest incomes.
Fiona Hyslop, the Education and Lifelong Learning Secretary, said this approach would "reduce students' debt on graduation and increase their income while studying".
She implicitly acknowledged that anything proposed in this area had to be a compromise, because there were not enough resources and not enough parliamentary votes for the Government to get its own way. "Loans are wrong for students and wrong for Scotland," she said.
But Ms Hyslop insisted that, however modest, her plans represented "a significant further step" towards easing the burden. The Government has already abolished the graduate endowment fee which more than 50,000 graduates and students no longer have to pay, and it has introduced a Pounds 38 million package to replace loans with grants for up to 20,000 part-time learners a year.
If the more "focused" option is adopted, it would be a rejection of proposals put to ministers by the National Union of Students and the Association of Scotland's Colleges.
The NUS wanted a "minimum income" for students of Pounds 7,000 a year, rising from Pounds 4,510. But the consultation paper says the Pounds 30 million on offer would allow that to rise to only Pounds 5,000. It would benefit those on lower incomes, but increase the parental and partner contributions for those on higher incomes.
The ASC has been pressing for a bursary system for the 24,000 full-time HE students in colleges, bringing them into line with non-advanced students and easing the transition from FE to HE. They currently receive Pounds 46 million in loans. The Government calculates that investing Pounds 30 million would allow it to replace Pounds 43.4 million in loans, leaving a shortfall.
But ministers also have other objections, principally that the ASC plan would erode parity of esteem between HE courses in college and university. It could even drive students to go to college first and then move to university later as this could be seen as a cheaper path to a degree.
Both organisations seem content to accept the Government's good intentions at this stage. Gurjit Singh, NUS Scotland president, said Ms Hyslop seemed willing to consider a minimum income of Pounds 7,000 for students, although this would only bring them up to the poverty line.
Sue Pinder, chair of Scotland's college principals, pointed out that students on Higher National courses had to "juggle up to nine different income streams to survive". She added: "College students are, on average, poorer and more debt-averse than their university peers, so it is vital that the right structure is in place to support them financially."
The costs of the package will be offset by money taken from other budgets, which include limiting maintenance support to five years, with the exception of specific courses such as medicine and dentistry; restricting eligibility for loans to those with a household income of less than Pounds 53,000; and ditching travel expenses which would be transferred into the main grant pot.