Prisoners studying university courses are believed to have claimed millions of pounds in student loans and grants.
Despite the fact that taxpayers are already paying out to keep them in jail, inmates succeeded in claiming more than 370,000 pounds in the past year alone.
Officials have been trying to ascertain the scale of the payments, made since 1998, amongst worries that the overall bill could reach several million pounds.
Universities Secretary John Denham acknowledged the handouts were “unjustifiable” and stated that all prisoner grants and loans for living costs would be cease immediately.
It is beyond belief that ministers had not noticed these payments before.
The Government’s prolonged ignorance was deemed to be “staggering” by the Taxpayers’ Alliance and the Tories said the debacle would appall students struggling to make ends meet.
There are basically two types of cost that students face: tuition fees and accommodation and day-to-day living expenses. For students who started full-time courses on or after September 2006, the maximum tuition fees that can be charged for 2008/2009 are 3,145 pounds. The maximum contribution cost for the same academic year for students who began courses prior to September 2006 is 1,255 pounds.
Living costs vary according to where you study and will inevitably be higher if you live away from home and higher still if you live away from home and study in London.
Financial support is available to help with tuition fees in the form of no-interest government loans. Some students may also be eligible for help with accommodation and living costs too. Grants and loans are paid termly.
Mr Denham acknowledged in a Commons statement that rules enable prisoners on full-time university courses to apply for and claim student grants and loans.
Some inmates were allowed out on day release to further their studies, he said. Mr Denham admitted 91 prisoners had received approximately 120,000 pounds in maintenance grants and 250,000 pounds in maintenance loans during 2007.
HM Revenue & Customs is responsible for collecting repayments of the student loans. (The issue and administration of the student loans continues to be handled by the Student Loans Company).
Repayments start once the student has started work and has earnings in excess of 15,000 pounds per year. (Or in the case of those who become self-employed, when profits exceed 15,000 pounds).
In PAYE cases, repayments are deducted from earnings by the employer each pay day. The employer is then responsible for handing over repayments to HM Revenue& Customs together with tax and national insurance contributions. However, critics claim that a large proportion of the debt which has been run up by prisoners would have to be written off because many inmates would not be able to repay it.