The biggest philanthropic gift for undergraduate financial support in European history will underpin a major new scholarship programme at the University of Oxford – making it possible, starting this autumn, for students from low-income backgrounds to complete their studies with zero upfront study and living costs.

The transformative programme is founded on a £75million commitment from alumnus Michael Moritz and his wife Harriet Heyman which, with a ‘matched funding challenge’ to the collegiate University, will generate an unprecedented total of £300million to support UK undergraduates from lower-income backgrounds.

At present, just under a thousand Oxford undergraduates (about one in ten) are in the lowest family income bracket (families with incomes of below £16,000). Within three years of its launch this autumn, more than half of these students could benefit from a Moritz-Heyman Scholarship. It is envisaged that eventually all such students would be covered by the scheme or equivalent similar scholarships.

Under the programme, Oxford students from the lowest-income families will receive financial support totalling £11,000 per year, eliminating all living costs. Those students will have their borrowing pegged to the level prior to the new higher fees regime coming into force this autumn. They will need government loans of just £3,500 a year – repayable only in line with future earnings.

In addition, Moritz-Heyman Scholars will receive financial support during vacations (so that economic hardship does not unnecessarily divert or distract low-income students), and will participate in a tailor-made internship programme to foster career opportunities.

Oxford’s Vice-Chancellor, Professor Andrew Hamilton, said: “Oxford is already offering the most generous undergraduate support package in the country. But this remarkable and hugely generous gift and initiative from Michael and Harriet allows us to go an important stage further towards our goal of ensuring that all barriers – real or perceived – are removed from students’ choices. It provides extraordinary support – financial and personal – for outstanding students.”

Michael Moritz, who is an alumnus of Christ Church, said: “Real talent is housed everywhere. Our new scholarship programme means that a gifted student – irrespective of financial circumstances – will always be 100% confident they can study at Oxford. This is a fresh approach to student funding in the UK – fuelled by philanthropy; catering to the dreams and aspirations of individuals determined to excel; while also safeguarding the academic excellence on which Oxford’s global reputation stands.”

The Prime Minister, The Rt Hon David Cameron, said: “I welcome this generous donation which will mean that many talented students, from some of the most disadvantaged backgrounds, will get help and support to study at a world leading university, and have a chance to realise their full potential.”

The total gift of £75m to Oxford will be made in three tranches of £25m. Each £25m will be matched by the equivalent of investment returns from £25m of the University’s own endowment, making £50m in total. Then there will be a challenge to the collegiate University and its supporters to match that £50m through further philanthropy. Only when the £25m stimulus has led to a full £100m for student support will the next £25m be given. This process will happen three times over, until Moritz and Heyman have donated £75m in all and Oxford has a total of £300m dedicated to undergraduate support.

Those who have already won a 2012/13 Oxford place with family incomes of below £16,000 will be eligible for a Moritz-Heyman scholarship. For 2012/13, 100 scholarships will be available, and priority will be given to students of science subjects and those who meet Oxford’s access priorities.

Students with family incomes below £16,000 who do not get one of the 100 Moritz-Heyman scholarships will still automatically receive Oxford University’s new standard 2012 support package, which provides both fee waivers and bursaries and is the most generous in the country.

Lowest-income undergraduates to benefit from:

• Zero living costs throughout course
• Fees limited to £3,500 a year (repayable only after graduation)
• Internship opportunities