Universities and colleges in the North East could be stripped of millions of pounds in funding used to give students from poorer backgrounds a fairer chance of getting a degree.
The cash is at risk because the Department for Business, Innovation and Skills, which is responsible for higher education, needs to make savings of £1.4bn.
Teesside University currently receives £5.9m each year, the University of Northumbria at Newcastle receives £3.5m, University of Sunderland receives £3.3m, University of Newcastle upon Tyne receives £1.1m, University of Durham receives £660,000, Newcastle College receives £959,00 and New College Durham receives £637,000.
The money, known as Student Opportunity funding, is allocated to universities and higher education colleges which succeed in attracting students from neighbourhoods where few people have traditionally taken part in higher education.
It also goes to institutions which succeed in retaining students who would statistically be more likely to drop out, and to those that recruit students with disabilities.
Leaked documents have revealed that the Department for Business is looking for ways to save £570m this year and a further £860m after the election.
Danny Alexander, the Chief Secretary to the Treasury, is reported to be pushing for Student Opportunity funding to be abolished, while Business Secretary Vince Cable and Higher Education Minister David Willets are lobbying to keep it.
Asked to comment on the reports, the Department for Business, Innovation and Skills said in a statement: “The Department is going through the process of allocating budgets for 2014-15 and 2015-16 and will set out plans in the usual way.”
Prof Peter Fidler, Vice-Chancellor of the University of Sunderland, was one of nine university leaders across the country to write a public letter warning: “The removal of this fund will damage economic growth and have a wider impact on sectors beyond higher education.”
The letter said that axing the fund “suggests that the Government is willing to abandon the cause of social mobility in higher education.”
The future of the fund was raised in the House of Commons by Labour’s Shadow Higher Education Minister Liam Byrne as MPs discussed funding for engineering students. He said: “On top of the huge cuts for educating 18-year-olds in college, we now hear rumours that the student opportunity fund that helps poorer future engineers will be completely axed.
“Will the Secretary of State take this opportunity to promise the House that he will not sacrifice social mobility to pay for the chaos in his Department’s budget?”
In reply, Business Secretary Vince Cable highlighted £400m in funding for science, technology, engineering and maths courses - but did not comment on the future of the Student Opportunity Fund.
The National Union of Students has launched a campaign to preserve the funding.
Toni Pearce, NUS president, said: “Cutting the Student Opportunity Fund is an absolute disgrace and, in the wake of cuts to the National Scholarship Programme, looks like the Government is backtracking on its commitment to support social mobility in favour of balancing the books on the backs of the poor.”
Mr Byrne said: “The Department for Business budget is a complete mess because high paying students at private colleges got access to the state student loan system. Now it looks like help for poorer students will be axed to pay for it.”