Ireland's expanding private college sector has been dealt a second blow within a year by Northern Ireland education minister Michael Ancram's announcement that fees and maintenance grants for students from Northern Ireland attending private institutions in the Republic of Ireland are to be phased out.

An earlier decision to phase out tuition fees in the republic's universities will also affect the intake into the private colleges - they are planning a High Court action to try to secure an extension of the free fees policy to their students.

Mr Ancram's decision has caused controversy, coming at a time when the London and Dublin governments are officially attempting to harmonise education provision north and south of the border following their joint framework documents.

There are about 1,000 northern students in the colleges some of which offer degrees validated by United Kingdom universities.

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Mr Ancram said that existing students would continue to be supported until the end of their courses but no new awards would be provided. The change in policy is expected to result in savings of Pounds 1.2 million, Pounds 2.5 million and Pounds 3.75 million over the academic years 1996/97 and 1998/99. The savings would be spent on education in Ulster, the minister said.

The number of northern students in the republic's private colleges more than trebled in a year. It jumped from 250 in the 1993/94 academic year to 900 the following year and is believed to have increased again in this year.

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The private colleges have tended to take people with lower A-level grades. The attraction is also that for many students Dublin is a preferable option to travelling to the mainland UK; not least that it can prove cheaper.

Mr Ancram said the payment of the awards was an anomaly that his department could no longer afford. He pointed out that neither students from the UK nor the republic received grant aid from their award-making bodies to attend such institutions.

However, it is known that the further education colleges in Ulster were not happy with the big increase in the cross-border traffic. They had complained that they lost students and courses because of a "cap" on spending while grants were readily available to those crossing the border.

The decision will mean a future loss of fee income of up to Pounds 1.5 million a year to the colleges. At least three of the private colleges have gone bankrupt in recent years. In a few cases students have been left stranded in the middle of their courses as well as out of pocket.

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The UK Government's decision will hit three Dublin colleges in particular - ABC, which offers degrees from the Liverpool John Moores University; Griffith College, which offers degrees from the University of Ulster; and Portobello College, which offers degrees from the University of Glamorgan. A smaller number of Ulster students are scattered around other private colleges in the republic.

Dermot Hegarty, the chairman of Griffith College, highlighted the benefits to Ireland as a whole from students coming to study in Dublin. Students from both communities in Ulster made friends in Dublin and realised that Irish nationalism was "more mellow" in the republic than it was in the north. Ray Kearns, president of Portobello College, said the decision was regrettable.

Portobello has about 300 students from the north and many of them were angry at the decision. National Union of Students/Union of Students in Ireland spokesman Peter O'Neill said the axing of the grants would limit student mobility. "We would not be a supporter of the concept of private colleges but we realise that many students do find some of the more specialist courses attractive," he added.