France has cancelled plans for a "joker" year, which would have allowed undergraduates to keep their grant for one repeat year.
The second-chance grant was one of the key measures resulting from a vast poll of young people which followed student demonstrations under the Balladur government 18 months ago.
Failure to pass a year at present entails automatic loss of the student's means-tested grant. But as financial hardship is believed to be one reasons for student failure, universities have been using special aid funds to help students through their repeat years.
"This is a scandal, it's shameful - a double sentence for students who have the hardest time studying," said student union UNEF-ID.
The teaching union FEN condemned the cancellation of the joker grant and the increase in enrolment fees, saying that "at a time when the government announces that conditions in first-level university courses are a national priority, it is introducing measures which increase selection according to income".
The decision has been an embarrassment for education minister Francois Bayrou, who held the portfolio under Balladur. "I cannot have cancelled a measure which does not exist," he said. He claims he inherited a Fr350 million deficit in the higher education grant budget.