Oxford University will use a record donation to abolish the tuition fee increase for its poorest students – keeping fees at £3,500 per year.
In a bid to remove financial barriers, eligible students will also receive funding for all their living costs.
With matched funding, a £75m donation from Michael Moritz and his wife Harriet Heyman is set to rise to £300m.
This is being claimed as the biggest such financial support package in European university history.
At the launch of the scholarships, Oxford’s vice-chancellor, Andrew Hamilton, spoke of the importance of “ensuring that all barriers – real or perceived – are removed from students’ choices”.
Mr Moritz, chairman of the US-based venture capital firm, Sequoia Capital, spoke of his own family’s debt to benefactors, when they had been refugees from Nazi Germany.
“I would not be here today were it not for the generosity of strangers,” said Mr Moritz.
From his business experience in the US, he said many of the great innovators were from “the most unlikely and impossible circumstances”.
But their progress had been made possible by university scholarships – and he wanted to support such opportunities.
The financial package will be worth about £11,000 per student per year – and will be available for students from families with an income below £16,000 per year.
This will continue in perpetuity – using the investment income from the donation – in a way similar to the endowments that underpin the finances of major US universities.
It also marks a UK university taking a greater step towards self-funding some students – and loosening its students’ reliance on the state-funded student finance system.
Under the scholarship scheme, students will only have to borrow the £3,500 per year, rather than the £9,000 which will be charged from this autumn.
Professor Hamilton spoke of his concern about the deterrent effect of the debts facing students, when fees are £9,000 per year.
Charlotte Anderson, currently studying German at the university, said she was the first person in her family to go to university – and that debt had been a major cultural obstacle for her family.