Jubilation over the news that cash-strapped further education students aged 19 and over are to get "assembly learning grants" of up to pound;1,500 has been marred by the removal of the access fund.
The access fund was introduced more than five years ago to increase recruitment and retention.
The 24 Welsh colleges have used the fund, which last year totalled pound;10 million, to provide needy students with free or subsidised transport and childcare, curriculum materials and examination fees.
Joan Siddle, vice-principal of Ystrad Mynach College, south Wales, said:
"This is going to cause us a lot of problems. We have 39 students who have free childcare places at our day nursery.
"A childcare place for a year costs more than pound;3,000 and we are not going to be able to continue to fund the nursery. We are in a very deprived area and we give our students a mileage allowance and help with exam fees."
David Finch, director of external development at the Association for Further Education Colleges in Wales, said: "In Welsh FE significant amounts of money are coming into institutions through the access fund.
"Some consideration should have been given to shifting money from one area to another."
But the assembly has defended its decision and claims the new grants will provide direct funding for students, who can use it for expenses including travel and childcare.
A spokeswoman said: "There will still be a financial contingency fund, similar to access funds, available for colleges to use on a discretionary basis."
The new student grants are part of a shake-up of funding and education in Wales which includes ambitious targets for post-16 education and a bid to significantly reduce illiteracy by 2010.
Education and Learning in Wales (ELWa) has just unveiled its first cohesive 10-year-plan. It is treading a very different line from England and has set targets for all levels from basic numeracy and literacy to creating new high-earning businesses for 2005 and 2010.
When the Learning and Skills Council launched its corporate plan in July, it set key targets only for 2004.
Enid Rowlands, chairman of ELWa, claims the approach of the plan will be "radical" and bravely stated. She wants to see illiteracy and innumeracy almost wiped out by 2010, with only 10 per cent lacking these skills.
At present 72 per cent of the population have basic literacy skills and 68 per cent basic numeracy skills.