People saying uni is a privilege, not a right: would you seisojky be ok with a family member not being able to get an education because their parent died?
Many students manage to complete their degrees by getting the max maintenance loan and working part-time. If OP's niece can't get the max loan because her father's income's too high, she can wait till she's over 21, when his income won't be a factor. Or she could go to a local uni, where she could remain at home and save way more than £120 a month in rent.
While the loss of the children's mother was tragic, OP's DB has been irresponsible, firstly by keeping the children in a private school that he couldn't afford, secondly by pissing money away on booze and finally by giving up his job. Oh yes, and by getting his and OP's parents to keep bailing him out.
Don't do it, OP.
If you were loaded, I'd think it was a lovely thing to do for these poor girls (girls plural, because I'd bet my house on OP being asked to do the same for the younger niece, too, if she does it for the first one), but you're not and you need your money for your retirement. Send her money as and when you feel you can afford to help out, or pop a supermarket gift card in the post now and again, so she use it on essentials and use her own money to treat herself.
I can't believe the cheek of the man, tbh. And what about the other set of GPs, are they still around? And other aunts/uncles? Maybe your DB should pass that begging bowl round a wider circle.