THOUSANDS of students are set to have their education grants axed or reduced because of their parents' investment in the government SSIA scheme.

The Sunday Tribune has learned that the government has decided that SSIA savings will be considered as part of family income in official assessment for grant eligibility when the scheme matures in 2006 and 2007.

Students may have their grants significantly reduced or withdrawn altogether if the income of their parents should exceed the grant threshold as a result of the predicted additional income provided by SSIA savings.

The five-year saving plan will be included as part of parents' "reckonable" income with the projected final amount divided by five and added on to the applicants' annual income. Therefore, a family with two SSIAs will have an additional 8,000 included as part of their annual income.

Almost 90% of people who have invested in the government savings scheme fall into the middle- to lower income bracket according to Department of Finance figures, with almost half of the investors earning between 20,000-50,000 per year.

Recent figures released by the Revenue Commission indicated that 40% of those who had invested in the scheme were saving the full amount of 254.00 per month.

Last week the Minister for Education, Noel Dempsey, defended his decision.

"Reckonable income means all amounts. For the purposes of determining grant eligibility, all investments must be declared including deposit accounts, savings certificates, life insurance bonds and other financial instruments where the interest-profit is accumulated and paid out as a lump sum at the end of the investment period, " he said.

Research carried out by leading financial analysts Amarach Consulting, concluded that the upper middle-classes were the least inclined to avail of the government savings scheme with only six out of 10 investing in an SSIA and of those, only half were saving for the maximum amount.