This follows revelations last month that almost 2500 postgraduates had been ordered by the Student Awards Agency in Scotland (SAAS) to pay an immediate £2200 to cover the graduate endowment fee which they had been previously told they could postpone.

Education Secretary Fiona Hyslop said that the law would be changed by the end of the parliamentary session on 27 June to allow these students to pay their fee by student loan and to defer payment until after they graduate.

Hyslop said:

"A critical issue has emerged in the past week or so relating to the previous practice of allowing students to take out a loan to settle their deferred graduate endowment fees.

"During detailed examination of the rules, we have found that a previous agreement for payment by this group of students of the fee by loan is not supported by the relevant regulations - The Graduate Endowment (Scotland) Regulations 2007 - laid on March 6, 2007 by the previous administration.

"This has created a challenging but important issue for us to address and we have been working urgently to find a solution. By introducing these regulations into the Parliament on Friday these students will be able to pay the fee through the student loans system.

"Ministers are also taking the decision today not to request repayment of any deferred graduate endowment fee until the students concerned complete their studies.

"By moving swiftly on this issue, the Scottish Government is ensuring that Parliament can agree these regulations by the last day of the current session on June 27, with them coming into force on June 30.

"For students who have already paid the fee but who are still continuing their studies we are currently exploring what options are open to us to put them back in their original position. We will be writing to all students concerned next week with an update."

Commenting on the move by the Scottish Government Murdo Fraser MSP, Conservatives Shadow Cabinet Secretary for Education & Lifelong Learning, said:

“I am pleased that the Education Secretary has bowed to Opposition pressure and taken action on this issue.  Thousands of postgraduate students received demands for immediate payment of the graduate endowment following the SNP Government's decision to abolish it for new graduates, and these students were simply unable to pay.

“A great deal of concern and alarm was caused, entirely unnecessarily, by Government blundering.  If Fiona Hyslop had done her homework before rushing in the legislation to abolish the graduate endowment she would have known about, and taken steps to address, this no doubt unintended consequence.

“The Government will now allow postgraduate students to add the endowment to their student loans.  Whilst this is a welcome step, a more competent Minister would never have allowed this situation to develop in the first place.”