Scottish institutions are to have a say on which funding reforms could give them greater room for manoeuvre.
The Scottish Higher Education Funding Council wants their opinion and is asking them whether it should allow for cuts in student numbers without penalties.
SHEFC is determined to guard against the sector suffering planning blight and its new corporate plan calls for the help of institutions in drawing up a "strategic agenda".
John Sizer, SHEFC's chief executive, said: "The danger is that if you simply manage for survival, institutions become moribund."
In a consultation paper, Professor Sizer says changes in teaching might lead to a temporary drop in student numbers before new programmes come on stream. The current funding method could penalise any downturn, with no guarantee that funded places would subsequently be restored.
This problem might be overcome by "bridging agreements", funding an agreed number of places for a fixed period.
SHEFC is offering each of its 21 institutions up to Pounds 50,000 to draw up strategic plans for 1997.