Thousands of immigrants could be forced to drop out of school if the Jewish Agency moves forward with a plan to end scholarship funding at the end of the current academic year.

Senior agency officials say the Jewish Agency plans to stop transferring funds to the Immigrant Student Authority toward the end of the year, a consequence of internal reorganization at the agency. About a year and a half ago, the agency decided to shift its priorities - and budgets - away from absorbing Jews in Israel, and toward strengthening Jewish identity among Jews living abroad.

The Jewish Agency has offered full scholarships to immigrants since 1968, as well as other support programs such as tutoring, workshops and psychological counseling. Around 7,000 students annually have received aid from the Jewish Agency in recent years. During the past year alone, 2,300 immigrants from Asia and Africa, 2,200 from Ethiopia and 2,000 from Eastern Europe received full scholarships through the administration.

Currently, some 80% of the students supported by the Immigrant Student Administration - a joint project between the agency and the Immigrant Absorption Ministry - are living in Israel without their families after having come here with the promise of full scholarships.

The agency has been cutting funding for immigrant students for several years. At one point the annual budget had been around NIS 35 million; in recent years it fell to NIS 16 million, with the balance covered by the Immigrant Absorption Ministry.

"It has nothing to do with the reform in the organization, but is a result of serious budget limitations," a Jewish Agency official said. "The Jewish Agency is losing its assets, contributions are down and the cuts are starting to be massive."

"For a few years they've wanted to get out of dealing with students, and were just trying to figure out how," the official added. "This was long before the change that [Jewish Agency chairman Natan] Sharansky made. That's just an excuse."

Haaretz has learned that other cuts by the agency are also in the offing, including cuts that could lead to the closing of absorption centers in Ashdod, Be'er Sheva and Jerusalem. The Jewish Agency is also planning to implement cuts that would dry up funding for immigrant organizations such as the Association for Americans and Canadians in Israel.

The agency denied that it planned to close absorption centers, but confirmed there would be "a cut in the Jewish Agency's outlay for operating absorption centers, because of the changing needs of the new immigrants over the years, who are not immigrants from countries of distress but immigrants with means from Western countries."

The agency added that it "isn't pulling out of its absorption programs," but believes "there is room to discuss a clearer and more logical division of tasks between the agency and the government on this issue."

According to Immigrant Absorption Minister Sofa Landver, "We've been speaking to Sharansky about what we could take on ourselves, but the Student Administration, the ulpanim [Hebrew schools] and the absorption centers represent NIS 100 million and we cannot handle that."