Tuition fees in England should be reduced to £7,500 a year and maintenance grants reintroduced – but graduates should pay back their loans for 40 years, the government has been told.

An independent review ordered by the prime minister said grants of at least £3,000 a year should be brought back for disadvantaged students.

Other recommendations include reducing the interest charged on loans while students are studying, but extending the current loan repayment period of 30 years by a decade.

Dr Philip Augar, who led the review, said such an overhaul would increase the sums repaid by those who have experienced a financial benefit by going to university.

Theresa May is expected to welcome several of the recommendations in a speech on Thursday, where she will say: “I was not surprised to see the panel argue for the reintroduction of means-tested maintenance grants for both for university students and those studying for higher technical qualifications.

“It will be up to the government to decide, at the upcoming spending review, whether to follow this recommendation.

“But my view is very clear: removing maintenance grants from the least well-off students has not worked and I believe it is time to bring them back.”

The prime minister is also expected to call for tuition fees to be reformed – and will say many students end up paying the maximum of £9,250 a year even though the cost to universities is less.

Dr Augar said the review told a “story of both care and neglect”, adding: “Our proposals are designed to build on the considerable achievements of our universities – one of the UK’s world-class industries – with a particular focus on the economy’s needs and improving value for money for students and taxpayers.”

Tuition fees in England were trebled in 2012, and according to estimates by the Institute for Fiscal Studies, the average student can now end up owing more than £50,000 when they leave university.

Dr Augar’s panel has suggested a reduction could be introduced by 2021-22.

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