Prisoners cash in on £620,000 in grants and loans - while in jail

Prisoners have been cashing in on hundreds of thousands of pounds in "unjustifiable" student grants for taking courses while in jail, ministers said today.

A long-standing loophole in the rules saw a total of at least £620,000 paid to prisoners in England in the form of loans and non-repayable grants over the past 10 years.

Universities Secretary John Denham said the payments - usually given to help students pay for food and rent - would be halted immediately.

In a statement to MPs, Mr Denham said 91 prisoners had received about £250,000 in repayable student loans during 2007.

Over the same period, prisoners were given £120,000 in non-repayable maintenance grants that are intended to help students make ends meet.

Since 1998, up to £250,000 was paid to about 250 prisoners in student loans.

Mr Denham said: "It has been brought to ministers' attention that there is a long-established but unjustifiable provision in the student support regulations that has allowed prisoners on full time courses in higher education to receive financial support in the form of loans and grants for maintenance.

"Payments properly made under the student support regulations will have been in compliance with the law.

"However, I do not believe that it has ever been the intention of Parliament that prisoners, who are accommodated at public expense, should receive any additional form of financial support for maintenance. "Nor do I believe that it is an appropriate use of public money.

"Last week, I suspended all student support payments to prisoners with immediate effect."

Mr Denham said he had asked the Student Loans Company to investigate further so ministers could provide "a complete estimate" of the costs.

The minister stressed that educating offenders was crucial to tackling crime.

"The education of offenders is an integral part of strategies to reduce re-offending," he said.

"Improving the skills of offenders, helping them to move into jobs, is likely to help break the cycle of re-offending."

About 590 prisoners are currently studying part-time, with a smaller number on full-time courses.

Mr Denham said he would investigate how to support offenders taking higher education courses.