The Palestinian Authority Cabinet has allocated $1 million to cover university fees for students enrolling this year.

The cabinet agreed to the Education Ministry’s proposal in its weekly meeting in Ramallah.

The announcement came after a union of university students threatened protests at the ministry if scholarships and loans were not transferred.

A series of student-led strikes have been held since February over the ministry's decision to convert the grants into loans, which the students say place additional burdens on many students. The grants, which are paid by the ministry, are provided to lower-income families.

Prime Minister Salam Fayyad says the initiative announced Monday is part of a plan to develop state institutions, noting that 1,500 projects have been implemented so far.

The prime minister announced a two-year plan for statehood in August 2009. The program, supported by the US and EU, outlined institution-building with the aim of unilaterally declaring statehood in 2011.