Tough decisions on top-up fees and student support lie ahead for the Welsh Assembly now that responsibility for them is to be transferred from Westminster, vice-chancellors and student union leaders warned this week.
Assembly education minister Jane Davidson announced last Thursday that after months of negotiations with education secretary Charles Clarke, a deal had been reached to devolve to Wales responsibility for the higher and further education student support system and tuition fees.
She said legislation would be brought forward after details had been worked out over the summer to give the assembly new powers over support for Welsh students, wherever they studied in the UK, together with full responsibility for tuition fees in Wales - including new policies on top-up fees.
The assembly hopes to acquire the powers before the beginning of the 2006-07 academic year so that it can honour its commitment not to introduce top-up fees before the end of its current administration, in April 2007.
An independent study chaired by Teresa Rees, professor of social sciences at Cardiff University, will be established to help the assembly decide policy on fees and student support beyond 2007.
Ms Davidson said: "Devolution of the student support powers will mean that, in line with arrangements in Scotland and Northern Ireland, the assembly will be responsible for determining the level of fees and student support.
This will mean that we can design and deliver a student support function that is consistent with our wider strategy for higher education and, in particular, our access and social inclusion agendas."
But some university and student representatives fear that the cost of compensating Welsh institutions for falling behind English rivals' income by forgoing top-up fees will be too high for Wales to maintain in the long term.
Funding council heads have already indicated that the assembly's agenda for reconfiguration in the sector could cost millions of pounds more than it has budgeted for. Assembly Liberal Democrats have calculated that compensation for banning top-up fees could add more than £150 million to the bill.
Tony Chapman - the chair of Higher Education Wales, which represents Welsh vice-chancellors - Jsaid: "Given the budgetary realities facing the assembly, they now have to make a hard decision. There are two options: variable fees are not introduced in Wales and the institutions are given compensation for this; or the policy is changed and variable fees are allowed. Welsh higher education institutions need a decision as soon as possible."
Chris Weavers, National Union of Students vice-president for education, welcomed Ms Davidson's announcement "with a degree of reservation".
He said: "The assembly has so far only put top-up fees back to 2007. We would like it to stick to its principles all the way and say it is not introducing top-ups full stop. We will campaign with NUS Wales to try to make that happen."