Increasing and widening participation have been at the heart of New Labour's higher education initiatives since they came to power. This article argues that their 1998 reforms of student financial support were inconsistent with their commitment to widening access and fairness in educational opportunities, and their desire for higher education to contribute to greater social cohesion. The article examines this policy contradiction. It explores how the 1998 reforms came about, and the effects of the reforms. It traces briefly the development of student funding policies under the Conservatives, and under New Labour. Next, is assesses New Labour's policies and policy objectives, drawing upon the findings of a major survey on students' income and expenditure. So, it explores some of the effects and consequences, both intended and unintended, of the 1998 reforms.