The German government is considering charging up to 8 per cent interest on student loans as part of a wider plan to reform the student subsistence grant.

The money generated would be redirected to finance skilled workers to train towards their master craftsmen certificates. Currently students whose parents cannot afford to pay their ÖйúAƬ costs receive government aid - half gift and half interest-free loan - under the federal education assistance act (BAfvG).

Under the proposal, they would still only have to pay back half of the money they received, but they would have to start repaying the other half, with interest, four years after graduating. Talks are under way with the Deutsche Ausgleichsbank on how such a loans system would be operated.

The idea has met with a predictable outcry from the opposition Social Democrats and student groups.

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Even the student Christian Democrat organisation said it would "scare off" less well-off students and undermine the BAfvG's aim to create equality of opportunity.

An education ministry spokesman said charging interest on student loans was just one of a number of ideas for BAfvG reform "at a time of tight budgets and the necessary setting of priorities".

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But plans to introduce a Meister-BAfvG - funding for advanced training for skilled workers to gain their master of crafts certificates - were more advanced, he said. A reform bill will be presented to the Bundestag before the end of the year.

Education minister Jurgen Ruttgers said he expected 90,000 applicants a year to apply for the Meister-BAfvG - 60,000 on part-time courses and 30,000 full-timers. It would cost DM400 million (Pounds 180 million) a year, with the government providing 65 per cent of the funding and the states paying the rest. Meister students would receive a maximum of DM980 a month.

Like plans for the student BAfvG, half the money would be in the form of a loan with interest. But qualified master craftsmen who set up their own business and create at least two jobs in the process, would receive a 50 per cent discount. The Meister-BAfvG conforms to the CDU policy of strengthening small and medium-sized companies, considered the backbone of economic growth. But SPD education spokesman Marianne Tidick called the Meister-BAfvG plans a "bravado act without constitutional basis" and said the Social Democrat states would try to block it.

The association of young tradesmen said the planned maximum of DM980 a month was "completely inadequate" and would not redress their disadvantage in comparison to ÖйúAƬ student grants. But a recent survey on the BAfvG by the student welfare organisation Deutsche Studentenwerk also revealed that only 24 per cent of west German students and 55 per cent of east Germans qualify for the state aid under the current means test.

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Many students are supported either by their parents or by part-time work. Two thirds of German students have part-time jobs.