The minister in charge of the controversial 100 euro household charge is urging local authorities to do whatever it takes to squeeze the levy out of homeowners.
As two councils admitted asking families for proof of payment when applying for education grants for children, Environment Minister Phil Hogan said it was acceptable.
"Clare County Council and the manager for the local authorities have decided themselves to take on board the gathering of information in relation to higher education grants," said Mr Hogan.
The minister said he has been incentivising councils to increase compliance level of the 100 euro tax. Only about 60% of homes have paid up. He insisted the controversial decision by Clare County Council to demand proof of payment from parents when their student children apply for college grants was not his.
Union of Students in Ireland (USI) president John Logue described the move as cynical and craven. "Never have I heard of a grant being refused until proof of payment is offered for a completely unrelated tax owed by another person," said Mr Logue.
He added that students are being punished for the decisions of their parents, which is putting their education at risk. The USI is now seeking legal advice on the matter.
Mr Hogan insisted the council was working closely with the Local Government Management Agency and following the right protocols that allow it to make the demands.
"I look forward to the same level of activity and whatever means necessary to get an increased level of compliance for the household charge," Mr Hogan added. "Otherwise, the people that are against this charge will have to explain why services are being cut."
The council initiative sparked angry reactions from many left-wing activists who have been fighting the levy and urging popular opposition. Richard Boyd Barrett, TD for the People before Profit/United Left Alliance, described it as blackmail and bullying.
"It is simply disgraceful that any council should threaten to deny any young person access to third level education in an effort to strong-arm their parents into paying an unjust austerity charge," he said.