University students would face minimum grade requirements to qualify for student loans in England under proposals that could in effect bar thousands of young people from higher education.

Under one proposal being discussed by ministers, a pass in GCSE English would become the national threshold for students to access government-backed tuition and maintenance loans through the Student Loans Company.

The change would affect more than 30,000 students each year who enrol on full-time first degree courses without formal qualifications such as GCSEs, as well as being a potential financial disaster for universities that teach large numbers of such students, often through franchise arrangements with external partners.

Critics said the new regulation would mostly harm students from poorer backgrounds and non-traditional backgrounds, including those educated overseas or who struggled within the school system.

Rachel Hewitt, chief executive of the MillionPlus group representing modern universities, said: “Universities are autonomous institutions, and if a student can meet their requirements, is willing to take on that investment and is assessed to be capable, MillionPlus questions why the government thinks placing additional barriers in their way is the correct way forward.

“Universities already have their own checks to ensure learners can meet English language requirements on their courses and will not take on students they are not confident can succeed.

“Furthermore, this approach risks blocking access to mature students seeking to re-enter education later in life, who are precisely the group the government should want to see reskill and upskill.”

The Department for Education (DfE) said it would not comment on speculation. But a spokesperson added: “We are restoring our world-class universities as engines of opportunity, aspiration and growth. That is why we are cracking down on poor-quality courses so that students can be confident they’re getting value for money from university degrees.”

Libby Hackett, the chief executive of the Russell Group of leading research universities, called for the government to work with the higher education sector over how minimum entry requirements could be applied, to avoid punishing groups such as mature students.

Hackett said: “In principle, we support a national minimum entry standard to higher education. Typically, there are minimum entry requirements in place to study A-levels, apprenticeships, many further education courses and most university courses. With significant levels of graduate contribution alongside public subsidies [of student loans], minimum entry thresholds can act as an important safeguard to protect student interests and taxpayer investment.

“Crucial to any ongoing discussion will be balancing this with appropriate flexibility for trusted institutions, so they can determine equivalent entry routes for mature students and those from underrepresented backgrounds.”

The proposal has been pitched within Whitehall as an English language requirement, similar to those required for international students. But it would also serve as a de facto admissions standard by cutting off access to finance.

Last year, more than 33,000 domestic students who began studying full-time for their first degree lacked formal qualifications such as GCSEs, A-levels or recognised equivalents, amounting to one in 15 starting in 2024-25.

Several universities, including Bath Spa and Leeds Trinity, admitted more than half of their domestic students without formal qualifications recorded by the Higher Education Statistics Agency. In many cases the students are taught through franchise arrangements with private or local colleges, in which the universities oversee the courses in return for payment.

The threat of minimum entry requirements comes as the government is preparing to cut its teaching grant for university courses in England by a further £100m, according to a report in Times Higher Education.

The DfE is expected to announce that its strategic priorities grant for 2026-27 will be cut by £100m to about £1.25bn. The grant is the main remaining source of direct funding for universities, and subsidises high-cost courses such as healthcare. The grant was previously cut by £100m for the current academic year.

A spokesperson for the DfE said: “We are still finalising decisions on the strategic priorities grant for the coming academic year and we will provide an update in due course.”