Students from Wales could become the most generously supported in the UK under new proposals being considered by the Welsh Assembly this week.
If adopted, students would be entitled to a non-means-tested grant worth Pounds 1,800 a year, which they could spend on anything while studying at any UK institutions. Better-off students would also be entitled to grants.
Teresa Rees, Cardiff University pro vice-chancellor, who chaired the Assembly's review of fees and student support, said the proposal might be the only legal and affordable way out of a political impasse on her review group's recommendation that top-ups should be introduced in Wales from 2007.
Last week, the Assembly Government was defeated in opposing a Conservative motion that Welsh-domiciled students should be exempt from paying top-up fees wherever they study.
Meetings were taking place this week between Assembly members, political party leaders, Professor Rees and Jane Davidson, the Assembly Education Minister, to consider implications of the vote and options for the future.
The final report of the review group, published two weeks ago, recommended that the Assembly consider the costs and feasibility of offering Welsh-domiciled students fee waivers or grants worth up to £1,000 a year.
The latest proposal from Professor Rees represents a compromise under which Welsh students would in effect not have to pay any more than the current Pounds 1,200 in tuition fees (accounting for the £1,800 grant).
But Professor Rees said that to avoid legal challenges, this "discount" may have to take the form of a non-means-tested grant. She said: "It would mean that Welsh universities could charge the full fee, so there would be no need for a supplementary income stream from the Assembly.
"My only concern is that since it would not be means-tested, it would put scarce resources in the hands of some people who do not need the support.
But if that is the price for increasing the proportion of Welsh students who enter higher education, then we may have to live with it."
Tim Palmer of the National Union of Students Wales said Welsh student leaders supported the proposals for a national bursary scheme for Wales.
But he warned: "That does not mean we are ready to back the introduction of top-up fees."