German education minister Jurgen Ruttgers's controversial plan to charge interest on student loans has moved a step closer to victory after being accepted by the federal cabinet. The reform would introduce an 8.5 per cent fixed interest on student loans from October 1, 1996, and would saddle graduates with debts of up to DM72,000 (Pounds 32,700).

It is universally unpopular with students, university rectors and education ministers in the federal states, who claim it penalises only the poorest students who have to take out loans. Students picketed the cabinet meeting and, following the decision, a sit-in was staged at the Free University of Berlin. Opposition politicians will still try to block the bill in the Bundesrat, the upper house. But Dr Ruttgers is confident of victory. Although education ministers disliked his bill he had not noticed any dissent from finance ministers of the federal states, he said.

Dr Ruttgers insists that his plans are the only way swiftly to solve the problems of overcrowded study conditions in German universities by encouraging students to complete their studies as quickly as possible. "This overload must not be allowed to become a long-term burden," he said. He claims his plan will make (DM1.6 billion) available until 1999.

Of this, DM700 million would be used to raise student grants so that most would be eligible for aid. Another DM500 million would be ploughed into higher education capital spending projects, he said. And he does not accept that his plan would hit the poorest students. Ex-students would not have to start repaying the loans until four years after graduation. He quoted a survey of 1989 graduates showing that 89 per cent of them had jobs four years after graduation - three quarters of them earning more than DM4,500 gross a month.

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Under the present federal education assistance act (BAfoG) students can receive support of up to DM990, half of which is a grant from the state and half an interest-free loan. Dr Ruttgers' reform would increase the maximum monthly support to DM1,050 but would charge interest on the half which is to be repaid. The education ministers and the university rectors want an expert commission to be set up to work out a new system of student maintenance aid.

Both opposition Greens and Social Democrats have already come up with their own plans. But Dr Ruttgers rejected both, claiming they would cost DM15 billion and DM13 billion respectively.

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* Germany's Caritas welfare organisation has called Mr Ruttgers's plans "antisocial and a criminal attack on the future of Germany", Michael Gardner writes. They have also been sharply criticised by the German Student Welfare Service.

It is unlikely that Dr Ruttgers's proposals will clear the parliamentary hurdle of state government representatives' approval. Even Christian Democrat governed states have declared their opposition to the scheme. According to the German Student Welfare Service (DSW), just under one third of 18 to 21-year-olds enrolled in higher education in western Germany. But only 18 out of 100 young people whose parents belonged to the lowest income groups started higher education. In the new eastern states of the federal republic, just 6 out 100 people aged 18 to 20-year-olds went to university. The DSW survey also shows a clear division of educational participation along the lines of social stratification.

Out of 100 first-year students in 1993, just 15 came from a working class background, compared to 65 from civil servant families. Results among the new eastern states of the Federal Republic are even more unbalanced.

Plans by the German Rectors' Conference favouring tuition fees of up to DM1,000 continue to be criticised by politicians, staff and student groups. At a discussion staged by the Deutsche Universitats-Zeitung, Hartmut Schiedermair, president of the Association of University Teachers, said: "Who can guarantee that additional income through fees will actually remain in the hands of institutions?" But he accepted that "penalty fees" for students exceeding the prescribed study time were justified.

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Torsten Buldtmann of the Association of Democratic Scientists and Scholars said: "Socially compatible tuition fees are a contradiction in terms. Of course they result in selection on income grounds."

Holger Krekel of the recently-founded Free Association of Student Bodies said: "What is happening now is that the crisis in the market economy is finding its way into higher education. The bottom line is that there are enough graduates. There is a big differences between individual aspirations and industry's requirements."