The Israel High Court ruled today that a clause in the national budget enabling kollel students to receive minimum income-guarantee payments was neither legal nor constitutional, as no other student groups were eligible for such funds (see the Jerusalem Post article). Charedi MKs were furious, while the Jerusalem Post editorial praises the ruling as consistent with Judaism, based on the Rambam.
The truth is that nothing is clear-cut here. As with most things, there have been a multitude of approaches to this throughout Jewish history. Rambam did indeed consider it a Chillul Hashem for anyone to take money for Torah. But I don't think that anyone today would be happy to fully adopt his approach. On the one hand, Rambam's prohibition included community rabbis and teachers; on the other hand, he did exempt all such people from paying taxes.
In medieval Ashkenaz, it was generally the case that all Torah scholars were financially self-sufficient. Some reluctantly permitted teachers of Torah to take payment under the category of sechar battalah, while others were opposed even to that. I am not aware of any situation where people to receive financial support for studying alone (i.e. not for teaching).
In Spain, on the other hand, it was widely accept for Torah scholars to receive communal funding as well as private sponsorships (just as in the days of the Geonim). However, the reason for this was that the general environment of Torah study was weak. And even Tashbatz, who has a lengthy rejoinder to Rambam in which he argues that it is permissible to finance Torah scholarship, states that “scholars and disciples who waive their entitlements and provide for themselves by the work of their hands, or by making do with less, will see great reward for their efforts, which are considered as piety. It is better for them to take a little time away from their constant study than to depend on the community for their livelihood.” He adds that due to the weakness of his generation, it may be preferable for Torah leaders to spend all their time in Torah and not work to support themselves.
Even R. Yosef Caro, who noted that Rambam’s strict prohibition on a Torah scholar receiving payment was contrary to all those who preceded and followed him, writes that if a Torah scholar is able to financially support himself, he should do so, but otherwise, it is permissible to receive communal funds. However, he specifies that receiving funds is only permissible in a case where he is teaching students, drawing people close to the ways of Torah, or acting as a rabbinic judge - i.e. working in a community role.
In summary, the situation with the Rishonim is complex. But even those who permitted the financing of Torah scholarship saw it as far from ideal, and often only permitted it in the case of supporting Torah teachers, not mature Torah students. Contrast that to today's situation, where people assume that financing mature Torah students is not only an ideal, but has always been the norm in Judaism.
All this is only a preliminary discussion; I am currently working on a more in-depth study. Meanwhile, here is a reading list:
Galinsky, Yehudah D. “Halakhah, Economics, and Ideology in the Beit Medrash of the Rosh in Toledo,” Zion 72:4 (2007) pp. 387-419 (Hebrew).
Kanarfogel, Ephraim. “Compensation for the Study of Torah in Medieval Rabbinic Thought,” in Ruth Link-Salinger (ed.), Of Scholars, Savants, and Their Texts: Studies in Philosophy and Religious Thought: Essays in Honor of Arthur Hyman (New York: Peter Lang 1989) 135-47.
——. Jewish Education and Society in the High Middle Ages (Detroit: Wayne State University Press 1992).
Kellner, Menachem. “Who is the Person Whom Rambam Says Can be ‘Consecrated as the Holy of Holies’?” The Seforim Blog, November 14, 2007, accessed at http://seforim.blogspot.com/2007/11/menachem-kellner-who-is-person-whom.html.
Leibowitz, Aryeh. “The Pursuit of Scholarship and Economic Self-Sufficiency: Revisiting Maimonides’ Commentary to Pirkei Avot,” Tradition 40.3 (Fall 2007) pp. 31-41.
Levi, Yehudah. Torah Study (Feldheim)
Ohrenstein, Roman A. and Barry Gordon, Economic Analysis in Talmudic Literature: Rabbinic Thought in the Light of Modern Economics (Third edition, Brill 2009).
Septimus, Bernard. Hispano-Jewish Culture in Transition: The Career and Controversies of Ramah (Cambridge: Harvard University Press 1982).
——. “Kings, Angels or Beggars; Tax Law and Spirituality in a Hispano-Jewish Responsum (R. Meir ha-Levi Abulafia),” in Studies in Medieval Jewish History and Literature, ed. Isadore Twersky (Cambridge: Harvard University Press 1984), pp. 309-335.
Ta-Shma, Israel. “On the Exemption of Torah Scholars from Taxes in the Medieval Period,” (Hebrew), in Iyunim beSifrut Chazal beMikra u-veToldot Yisrael Mukdash LeProfessor Ezra Zion Melamed (Ramat Gan: Bar Ilan University Press 1982) pp. 312-322.