Universities spent £192m on bursaries for lower-income students in 2007-8
Many students and their families do not know about bursaries designed to help the less well-off, research suggests.
A survey of students found three-quarters did not realise universities have to give a bursary of at least £300 to anyone on a full maintenance grant.
And one in 10 of those questioned who advise students about university were also unaware of the bursaries.
The watchdog for fair access to university in England says institutions must do more to raise awareness.
The body, known as OFFA (The Office for Fair Access) says the research has helped create new guidance for universities and colleges on how they can help improve awareness and understanding of bursaries.
It wants students to have the information before they apply.
The research, for Offa, by Professor Claire Callender, of Birkbeck, the University of London and the National Institute of Economic and Social Research, looked at university bursaries and scholarships in England, through interviews with students, parents, higher education advisers and universities.
Effect on grants
Researchers found the majority of students (58%) who had looked at university information on bursaries thought there was insufficient information on when they would receive a bursary while 44% thought there was too little on how to apply for a bursary.
Most students (65%) believed it was difficult to understand who qualified, although three-quarters had heard of them.
Almost half could not work out whether receiving a bursary would affect their eligibility for government grants and loans.
Only one in three of the 114 parents questioned knew about the minimum bursary universities have to pay to those from the least well-off families.
Under current rules, universities in England which charge tuition fees higher than the government's maximum maintenance grant of around £2,800 must provide a minimum bursary of around £300 to low-income students.
Professor Claire Callender said: "Universities and colleges have responded positively and generously to the call to introduce bursaries, spending £192m on bursaries and scholarships for lower-income and other under-represented students in 2007-08.
"However, what this research shows is that, despite great efforts by universities and colleges to give students information, bursary messages are not always getting through.
"In many cases, bursaries are not helping to shape students' choices about which universities to apply to at key decision-making stages."
The majority of students and parents rated themselves as ill-informed about support and researchers said universities were "out of touch" with the level of knowledge of bursaries among students, their parents and higher education advisers.
There had been a "disappointing take-up" of bursaries in 2006/7 and 2007/8, researchers said, largely due to the design of the Student Loans Company application form, which has since been changed.
In 2006/07, there was an under-spend of £12m and 12,000 students from low-income families failed to collect their bursaries.
In 2007/08, there was an under-spend of £10m and 6,500 students lost out this way.
Prof Callendar said higher education institutions used student support "as part of a competitive strategy to widen participation and to assist their institutional repositioning in an increasingly competitive higher education marketplace, especially post-1992 institutions.
"In addition, [the institutions] hoped, through their financial support, to influence or alter student behaviour, especially in relation to retention and completion."
Professor Steve Smith, president of Universities UK, said: "All universities are firmly committed to providing generous support for lower income students to help ensure that no-one is deterred from entering higher education on financial grounds.
"The take-up of bursaries among students from the lowest income groups has improved year on year and, as the report suggests, this is expected to continue."
The study included a telephone survey of 74 higher education institutions between October and December 2008.
It also included an online survey in October last year of just under 5,000 full-time undergraduate students; a telephone survey of 114 of the students' parents in December 2008; a telephone survey of 150 higher education advisers in schools and further education colleges between November 2008 and January 2009.