British students face the prospect of increasingly tough competition for degree places in English elite academic institutions as universities look to boost private funds by enrolling more postgraduate and overseas students.
This week, University College London became the latest institution to unveil plans to diversify its student intake and reduce its reliance on state funding.
Under the plans, the proportion of postgraduates, which is now 37 per cent, would rise to 50 per cent by 2014. At the same time, the proportion of students from outside the European Union would rise from 21 per cent to more than 25 per cent.
Overall, student numbers would remain frozen.
Other top research institutions are preparing to increase postgraduate and international admissions at the expense of undergraduate enrolments from home and elsewhere in the EU. Some fear that their state grants will be reduced to help support less popular universities if top-up fees are introduced in 2006.
Vice-chancellors believe that many universities will be unable to raise sufficient income from extra fees and will receive greater state subsidies to compensate. As a result, universities with high demand for student places that are able to charge the full £3,000-a-year fee would lose out on state grants.
The elite institutions have already complained that they lose money through teaching home and EU undergraduates. Imperial College London and Oxford and Cambridge universities have calculated that they would continue to lose money even if they charged these students tuition fees of £3,000 a year.
Malcolm Grant, provost of UCL, said: "There is a strong possibility that higher tuition fees will simply induce successive governments to reduce levels of grant, and that the Higher Education Funding Council for England grant will not only decline over time, but will be redistributed to favour the weaker institutions. If this were to occur, UCL could easily become worse off.
"The time may have come to consolidate or even to reduce our student numbers. This would be financially prudent as an overall strategy only if it were accompanied by a shift in the balance between UK-EU and international students, and/or between undergraduate and postgraduate students."
Universities are free to generate as much money as they can from the course fees for postgraduates and students from outside the EU, as these fees are not regulated by the state.
Professor Grant calculated that if UCL took 1,305 fewer UK-EU undergraduates, it would need to recruit only 132 international students in their place to draw the same income. The UCL plans have been sent to staff for consultation and are due to be discussed by the UCL council next month.
Earlier this month, The Times Higher revealed that Oxford planned to raise total student numbers by two percentage points a year through postgraduate recruitment until 2009. Postgraduates would outnumber undergraduates by 2016 if the trend continued.
Cambridge forecasts its postgraduate numbers will increase by two percentage points a year while undergraduate numbers will stay static.
The London School of Economics, meanwhile, has over the past decade pursued a policy of reducing the number of home-student enrolments.
Imperial allows individual departments to determine which students are accepted - but the income they raise is returned to the departments, giving staff the incentive to recruit those who pay their way.
At present, the LSE has the highest proportion of postgraduate students of the Russell Group members. Some 57 per cent of its students were postgraduates in 2001, according to data from the Higher Education Statistics Agency.
The figure for both Imperial and Birmingham University was 37 per cent, while the figures for UCL and Cambridge were 37 per cent and 34 per cent, respectively.