Welsh students studying in Wales currently pay £1,200 a year in fees
A report has recommended scrapping the assembly government's support for all Welsh students to pay lower fees than in England.
Welsh students studying in Wales pay £1,200 in fees - rather than £3,000 for students from other parts of the UK - at a total cost of £61m per year.
A review proposes a targeted system, linked to family income, which could operate from 2011.
Students from poorer backgrounds could receive up to £6,000 a year.
The review team propose helping those students with homes in Wales, whose families are on the lowest incomes.
The task and finish group, headed up by the vice chancellor of Bangor University, Professor Merfyn Jones, was established in June to carry out the review.
A report recommends scrapping support for Welsh students to pay lower fees than in England
It has now presented the first part of its report, looking at student debt and widening access, to Education Minister Jane Hutt, who is expected to formally respond next month.
The group's proposals would mean that those from low income families would receive most financial support, while those from families on the highest incomes would receive very little.
BBC Wales understands that the plans would see an increase in the assembly learning grant (ALG) for the most disadvantaged students.
This could mean giving £5,000 to £6,000 directly to them and letting them choose whether to pay tuition fees up front in full, or to use the money as a living allowance throughout the year.
This outcome could lead to the £1,890 currently given to all Welsh students studying in Wales being scrapped.
The ALG at the moment gives £2,835 to those students who come from a family with a household income of up to £18,370. They're able to use this providing their family lives in Wales but it allows them to study outside Wales.
Those with a household income of between £18,370 to £39,000 receive a partial grant, and those beyond that will not receive anything.
BBC Wales also understands the group wants the threshold where students have to start repaying their loans increased from the current £15,000 up to between £18,000 and £20,000.
However, the One Wales coalition document commits the assembly government to keeping current spending levels in place until the end of the 2009 /10 academic term where the tuition fees bill would rise to £77.9m.
The second phase of the group's review will look at the purpose and role of higher education in Wales and is due to be completed by the end of February 2009.
The Welsh Assembly Government said Prof Jones submitted his final report on the first stage of his higher education review to education minister Ms Hutt last week.
"The minister will now consider this very important piece of work in the coming weeks in consultation with her cabinet colleagues and will formally respond in November," said the spokesperson.
Conservative education spokesman Andrew Davies said the report recommendation came as "little surprise" as the assembly government had failed to put sufficient money into higher education.
"Year after year the funding gap with England and Scotland has widened," he said.
"The assembly government has let that gap become so unmanageable that it looks increasingly likely parents and students are going to be forced to pay more to plug the gap."
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