Grants given to the poorest university students could be cut as part of savings the Department for Business has to find, BBC Newsnight understands.

Proposals to start phasing out grants, worth up to £3,387 a year for students from less well off households, were first drawn up in 2013.

Back then, Nick Clegg, the ex-deputy prime minister, blocked the proposal.

But ministers are reconsidering the idea as they seek to find savings ahead of the Budget, Newsnight understands.

One source familiar with the discussions said: 'You tighten eligibility then eventually, move it down to nothing."

'Likely to happen'

Currently, more than half a million students in England receive a maintenance grant from the taxpayer, worth in total £1.57bn a year.

Students from households with incomes of £25,000 or less receive £3,387 each year.

The amount of cash payable decreases as household income increases, and support stops at £42,000.

Removing the grant completely could save around £2bn over three years, while converting a portion of individual grants to loans, or restricting eligibility would save less.

Image caption Former Conservative adviser Nick Hillman thinks the cut is on the cards

Former Conservative adviser Nick Hillman from the Higher Education Policy Institute believes the move is almost inevitable.

He told Newsnight: "BIS is one of the departments that no political party promised to protect, and this is one of the very big items in BIS's budget, so I do think it's likely to happen, yes.

"To be honest, although it causes big problems - it will mean bigger debts for students including poorer students - it is better than reducing the number of university places."

Government sources refused to comment on the proposal, but did not deny the suggestion, and one source said "officials are looking at everything".

'Unreasonable barrier'

Newsnight has also been told there is disagreement between new Business Secretary Sajid Javid and universities minister Jo Johnson, over how to proceed, with the latter more nervous about proposals to reduce this part of the budget.

National Union of Students vice president Megan Dunn said cutting maintenance grants would be "detrimental" to poorer students and could deter people from applying for university.

"We know that our poorest students are the most likely to be deterred by debt, but it could also affect where students choose to live and which courses to take.

"It will mean staying at home instead of moving into halls or shared accommodation and applying for shorter courses to reduce costs," she said.

"If grants are cut, it could mean the cost of student loans will go up for everyone or repayment conditions will get tougher than they already are. This is yet another unreasonable barrier to accessing higher education," she added.

Image copyright PA Image caption Universities minister Jo Johnson is said to be not keen on cutting support grants

Higher education experts query whether the changes would save the taxpayer in the longer term.

Reducing the amount of money paid out in grants would help the public finances in the short term, with the reductions helping to cut the deficit.

But transferring more students onto loans would increase the national debt, so could, in theory, end up costing the taxpayer more in the long term.

'Over the edge'

Mark Leach, policy expert from the education blog Wonkhe.com, said: "I think it's increasingly likely to happen but in the long run it can't be good for universities or graduates because it adds to the cost of the overall system, the loan book, and future chancellors of the exchequer could come back to the universities and come back to graduates and say, 'we're going to need to take more money back to pay for the system'."

While the increase in tuition fees did not have the negative impact on student participation that many predicted, there are concerns that reforming grants might.

Student Wesley Cripps, who has just completed his studies at Buckinghamshire New University and received maintenance through his course, told Newsnight that he probably wouldn't have gone to uni if he had not had a grant.

"I was already a little skittish, that would have pushed me over the edge," he said.

As Mr Cripps sat in front of the work he has completed for his degree, he said: "I feel really proud, and I think taking away the maintenance grant could potentially take away that opportunity from future generations of people like me, that are sitting here today gleaming with pride."