The Executive believes the new system will better meet the needs of Scottish students and help tackle student debt.

James Nicholson from Abertay told the Tele the university welcomed the move and believed it would be of great benefit.

“It will be easier for us to provide good money management advice and help students keep their finances in order,” he said.”

He continued, “It’s very easy, under the current system, for students to overspend when they get a large loan instalment at the start of the year, and it often means they take on part-time work — which could affect their studies if they end up taking on too many hours.

“We recommend students only work a maximum of 12 to 15 hours a week during term time, so this way they will have a regular income every month, and hopefully it will cut down cases we’ve seen where work takes precedence over studies due to financial difficulties.”

Politicians have described student debt issues in Dundee as “alarming” — with the 5000 students who graduated from the city’s institutions last year estimated to be leaving with loan debt of around £75 million.

Announcing the new scheme, lifelong learning minister Nicol Stephen said, “We recognise money management is a big issue for many students.

“I want to ensure the distribution of payments for living costs support meets the needs of Scottish students studying here.

“While Further Education students are paid on a monthly basis, HE students can run into budgeting difficulties when paid only three times a year with the payments linked to the first day of the term.

“This arrangement began at a time when the academic year was generally divided into three equal terms.

“However, as more institutions move away from this pattern, we thought it appropriate to consult on whether the current payment model for loans and bursaries is the right one to support students.

“As a result, we have decided a system of monthly payments — with some front-loading of support — will benefit the majority of students by helping them to manage better the funds available to them.”

“This will take effect from academic year 2007-08, provided I am satisfied all the necessary IT requirements are in place and have been fully tested.”

In addition to changes to the frequency of student payments, Mr Stephen announced that future responsibility for the student maintenance loan component of support would transfer from the Student Loans Company to the Students Awards Agency for Scotland (SAAS). This will also take effect from the academic year 2007-08.

He said, “Currently Scottish students apply to SAAS for their support in a single operation but receive their payments in two ways — loan payments from the SLC and payment for all other types of support from SAAS.

“By transferring loan payments to SAAS, we will create a ‘one-stop shop’ for students applying for support, further improving the level of service they receive.”

NUS Scotland President Melanie Ward welcomed the move towards a monthly system of student support saying, “NUS Scotland has been calling for a move to more flexible student loans payments for a number of years now, so we welcome the forthcoming introduction of monthly payments.

“The new system will be much more suitable for most students and will assist with planning and budgeting.”