The Union said delays in allocating funds to local authorities are caused by the Government's failure to reform the grants system as part of the Student Support Bill.
USI President Peter Mannion said there has been a 30% increase in the number of students applying for maintenance grants this year.
He claims that some may have to drop out of college due to financial problems.
Mr Mannion said vulnerable students have little prospect of securing part-time work due to the economic downturn and face significant challenges paying for rent, food and course materials in the absence of maintenance grants.
Sligo Co Council has already said late payments from Government departments are impacting on its finances and that it cannot give out student grants until it receives the funding directly from the Department. The delay will affect up to 500 students, including around 300 first years.
In a statement this afternoon, the Department says it received a representation from the County Council on 24 August requesting that monies be advanced to facilitate payment of the first grant instalment for the 2009/10 academic year.
The Department says it has provided Sligo County Council with a form to make an early claim.
It says the local authority needs to demonstrate the level of funding it needs to cover the grant payments but that, so far, it has not done this.
The Department of Education says it has not been contacted by any local authority in respect of difficulties relating to the payment of maintenance grants to third level students.
The Department says local authorities can normally recoup funding they pay out for the first grant installments by the end of November each year.
These arrangements are being kept under review, in case local authorities find their finances are being put under strain by having to wait until then to recoup the money paid out.
The County Council has been advised that an early claim would be given high priority once received to facilitate the early payment of the first grant instalment to eligible students, according to the Department.
