Leader: Time to wise up to reality of hardship

The present system of student finance is wrong for many reasons. But for the politicians who must decide its future, two stand out. It threatens government targets for half the United Kingdom's young people to experience higher education. It also attacks government ambitions for social inclusion, by making universities less attractive to those who need them most - people with little family history of higher education and a disinclination to run up significant student debt by their early 20s. It turns out that the cost of solving these problems is less than had been anticipated - only half the cost of reintroducing grants at 1997 levels. Even with the economic climate cooling, the numbers are not impossible. If they were, the prime minister would not be hinting at change.

It seems likely that the restoration of grants in England will be pushed by developments in Scotland, Wales and Northern Ireland, where politicians have been quicker to realise the political cost of making higher education unaffordable. Next week's A-level results are likely to confirm another reason for restoring means-tested grants. The present system is deterring applicants but is also encouraging successful students to go to the most prestigious university they can. Why not, if they are paying? The result is that the universities that are doing most to push access, equal opportunities and social inclusion are suffering most, and in some cases have severe financial problems. The new universities have little research income and few assets. Paradoxically, they are in a poorer position than older, research-intensive institutions to offer bursaries and other awards to the students who need them most.

Although initiatives such as opportunity bursaries are welcome, a system that provides cash to needy students nationally, wherever they need to study, is the way ahead. Anything less produces postcode lotteries and other forms of discrimination that often work against the people in most need of help.

And social exclusion is not only about employment. Graduates are more capable than the population at large of dealing with people in authority, more useful to those around them, and even healthier. Our analysis shows that the grace-and-favour system can deny cash to the poor because they have relatives already in higher education or because a parent has a degree - even one hard-won as a mature student. In a world where a degree is a passport to a desirable job, this risks ensuring that poor people's children can only get poor people's jobs.