Clare County Council changed its position on the issue yesterday evening and said anybody whose parents have not paid the charge will be treated no differently to those who have.
Cork County Council, the largest local authority, said it is not linking household charge payments and higher education grants.
USI president John Logue said it has had legal advice on the matter: “There is no statutory instrument that permits the asking of information from a third party, but in essence this would be asking for the household tax status of a parent of a student applying for a grant.”
Environment Minister Phil Hogan, whose withholding of €15.7m from various councils to incentivise greater compliance with the charge, said it is up to them to pursue those with a liability.
Up to last Friday, €103m of the estimated €160m owed in household charge payments was collected, but Mr Hogan said the €15.7m he has withheld could be recouped through improved compliance.
However, the office of the Data Protection Commissioner made clear last night that any information gathered by councils in connection with student grants can not be used to pursue the household charge.
The information was sought in recent weeks from all 800 applicants to Clare County Council who had received grants from it last year. With all first-time grant applications now handled by a centralised agency, staff has assigned to the work has fallen from three to two and the cost is down from €120,000 in 2011 to about €90,000.
Having said all day that those who have paid would be prioritised for grant payments, the council last night said all grant applicants were asked for proof of payment of the household charge as part of its ongoing awareness campaign on the charge.
A spokesperson said: “Applicants who have completed forms and provided the necessary information will have their payments issued as expeditiously as possible. Applicants who do not provide the requested information will be requested to submit complete applications, which may result in delay.”
Earlier yesterday, Education Minister Ruairi Quinn had said it was reasonable for Clare County Council to ask about the household charge payments and he expected other local authorities may follow suit.