STUDENTS would receive a guaranteed minimum income of more than £8,000a year under a radical shake-up of education funding recommended to Scottish Ministers.

The sum is based on the pay of workers receiving the Scottish Government's living wage of £8.45 per hour.

Students at universities and further education colleges would be eligible for the cash.

A group tasked by the Scottish Government to look at improving student support will unveil the proposals tomorrow. It is chaired by Jayne-Anne Gadhia, chief executive of Virgin Money, with university management, student representatives and trade unions also sitting on the body.

The call for minimum student income entitlement of £8,100 is at the heart of the findings in the report A New Social Contract for Students – Fairness, Parity and Clarity..

Details of the package such as whether the cash would be in the form of loans or grants will be set out at the launch of the report in Edinburgh.

A review group source said, "We understand that there is a big debate to be had about the balance of how this is resourced.

“Establishing a minimum student income would be a huge step forward and taken together our recommendations amount to the best student support package that would be available in the UK."

Scottish students at university in Scotland already benefit from free tuition. However, the £8,100 guaranteed income is part of a series of measures aimed at easing the debt burden on students.

The plan is aimed at transforming financial support in the higher and further sector.

Ministers will be offered a choice of greater, lesser or no additional public spending. However, the key recommendation would cost an additional £16m a year.

The report will present a series of different options for covering the cost of the minimum student income.

A mix of changes to grants and bursaries, as well as improved terms for student loans are to be unveiled in the report. Debt will be written-off for students going on from colleges to universities, under the plans.

Ministers are urged to adopt an increased loan repayment threshold.

Currently, university students can borrow up to £5,750 a year to help pay living costs, but support for college students is much lower. However, the review group says that student loans should also be made available to all those attending further education colleges.

The source said: "The priority is getting the right structure in place now and the level of public spend will be decided according to political choices and overall resources available in future budgets and spending reviews.

"As well as clear benefits to the individual and society, the return on investment is huge – for every £1 of public spending in further and higher education, there is almost £6 of economic impact.”

The independent review of student support was announced over a year ago by Shirley-Anne Somerville, Scotland's Minister for Further Education, Higher Education and Science.

The Scottish Government previously said that the recommendations should be made in awareness of the constraint on the public finances.

Other members of the group include NUS Scotland president Luke Humberstone, Universities Scotland director Alastair Sim and Colleges Scotland chief executive Shona Struthers.

A number of experts also sit on the group, including Yvonne MacDermid, chief executive of Money Advice Scotland, Angela Toal, a welfare rights worker at the Child Poverty Action Group and Russell Gunson, Director, IPPR Scotland – a left-leaning think tank.

Speaking ahead of the report, a Scottish Government spokesman said: "This Government firmly believes that access to higher education should be based on the ability to learn, not the ability to pay, which is why we remain committed to ensuring Scottish students studying in Scotland benefit from free tuition.

“We look forward to the findings of the independent review of student support report and will work with stakeholders and other interested parties to ensure that we continue to offer the best possible support to students in Scotland.”