University applicants will be able to apply for their student loans at the same time as they apply for their places, and will receive offers for both simultaneously, under government plans to widen access to higher education.

John Denham, the Universities Secretary, said that the proposal would give students more time to make plans for financing their studies as well as providing information and reassurance to those who were daunted by the fear of student debt.

There is evidence that a significant minority of A-level and mature students are deterred from taking up university offers, or from applying in the first place, for fear that they might not be eligible for student loans or might not be able to manage repayments once they graduate.

Mr Denham said that the key to overcoming this was to find innovative ways of encouraging students and their families to think about and understand student finance earlier.

“We want to have a system where you can formally apply for your student finance at the same time as sending off your Ucas [Universities and Colleges Admissions Service] form. That way, they would know where they stand from the outset,” he told The Times.

The change would accompany a move to allow students to apply to university after they have received their A-level results. At present students are offered university places on the basis of grades predicted by their teachers, but research has shown that half of these predictions are routinely wrong, although usually only by one grade. Mr Denham said that he hoped a new system of postqualification application would be introduced from 2012.

The predicted grades system can work against bright students who lack the confidence to apply for competitive, high entry-grade courses at prestigious institutions. Experts believe that allowing them to apply after their results may persuade the most able to lift their sights. “The particular attraction is that there maybe some students who would apply for a different choice of institution once they know how they have done,” Mr Denham said. He was speaking before a publicity campaign to raise public awareness and increases to student financial support.

An extra 100,000 students a year will be eligible for grants towards university living costs once the new system starts. In the next academic year, the parental earnings limit will be raised to £60,000, enabling more middle-class students to qualify for a subsidy, which will range from £100 at the upper end to the full £2,835 a year for those from families earning less than £25,000, up from the present £18,360 limit.

The announcement is intended to reassure those who fear that the introduction of the £3,000-a-year top-up fees at university from September last year would deter students from deprived backgrounds.

Mr Denham said that the extra financial support would help even more young people to fulfil their ambitions for a university education. He emphasised that students would not be expected to repay any student loan until after they had graduated and had a job. The measures also include a new “repayment holiday” to allow graduates to take a break of up to five years from their loan repayments to help to meet the cost of buying a home or starting a family.

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