Tuition fees will increase and maintenance grants and loans will be frozen from 2010.
The government has announced that tuition fees will increase by 2.04% to £3,290 a year in the academic year 2010/11.
Maintenance loans and grants will be frozen so that they do not increase as they have done in previous years, but will remain at the 2009/10 amounts for the 2010/11 year.
Trainee teachers will also see their grants reduced. Only trainees from households earning £34,000 or less will receive grants, the rest will be given loans to pay for their course.
Higher education minister, David Lammy, made the announcement in a written ministerial statement.
He said: “In these difficult economic times, we are continuing to take difficult decisions in the interests of students, universities and taxpayers alike.
“We have therefore decided to maintain the current package of maintenance support for full-time students, reflecting the current low inflationary environment.”
The Guardian reported that the plans were intended to ensure that grants would not be cut as a result of increasing student numbers.
The number of students from poorer backgrounds has increased from 18.1% to 21% in the last year.
The increase in demands for grants has reportedly caused the student finance system to be £200 million out of pocket.
Director general of the Russell Group of 20 leading universities, including the University of Sheffield, Wendy Piatt, said: “The introduction of fees has managed to halt a long-term decline in funding per student but funding for higher education in Britain is still significantly lower than in most other OECD [Organisation for Economic Co-Operation and Development] countries.
“The system of student support in England remains one of the most generous – and expensive – in the world.”
Wes Streeting, NUS president, said: “Students are already racking up thousands of pounds of debt, and in a recession every penny counts.
“It appears that the inflation rate is being applied where it suits universities, but not where it will improve student support.”
Sally Hunt, general secretary of the University and College Union, said: “This is a kick in the teeth for the thousands of people who have already applied to university. We should be doing all we can during these difficult times to make education and learning as accessible as possible.
“For all the prime minister’s warm words and promises that education would not become a victim of the recession, we are yet to see any actions to back up his rhetoric.”