A National Learning Entitlement would give school leavers £5,000 a year for two-years to spend on continuing their education.
These grants could also be used by university students to be put towards their tuition fees, according to the proposal.
The academics who designed the scheme suggested it would cost £8.5bn a year to run, but would foster a system that was fair, affordable, efficient and flexible. They forecast take up of between 60% and 80%.
The paper suggests further education has been “grotesquely neglected in the public debate” and highlights that its funding has shrunk by a quarter in five years, reducing the opportunities available to young people.
“The numbers of students over 19 in further education and skills has slumped from 4 million in 2005-06 to under 2.5 million in 2016-17.”
On the other hand, the proposal argues: “In the university sector huge amounts are spent on squeezing more young full-time students into three-year honours degree courses.”
Adoption of the proposal would improve diversity of learning options available and be cheaper than full-scale abolition of tuition fees, estimated at around £10bn.
However, Lee Elliot Major, chief executive of the Sutton Trust, voiced his concern about the cost of the proposal adding: “Our research showed you could restore maintenance grants and means test tuition fees for £3.2bn.
“But it is right also to look at ways to support those not going to university to study or take on apprenticeships.”
A Department for Education spokesperson said the current student finance system was fair, sustainable and progressive.
“Advanced Learner Loans are also available to thousands of adults wishing to retrain, helping them to meet upfront fees and removing one of the main barriers to learning,” they said.
The paper was written by Tom Schuller and Tom Wilson of the Institute of Education, together with Sir Alan Tuckett, professor of education at the University of Wolverhampton.
It was issued through the institute’s Centre for Learning and Life Chances in Knowledge Economies and Societies.