Israel's seven research universities this year face a deficit of almost half a billion shekels (Pounds 66 million) because of the deteriorating security situation.
Some 800 million shekels have been cut from the higher education budget alone over the past three years.
The new chairman of the Council for Higher Education's planning and budgeting committee, Shlomo Grossman, predicts the situation will get worse "because the Treasury will cut the higher education budget -5.2 billion shekels -by a further 160 million shekels, so the deficit will rise to 650 million-700 million shekels".
The committee allocates the main part of the budget -about 60 per cent - according to universities' teaching and research output. About a quarter comes from tuition fees and the rest from fundraising and investments.
Limor Livnat, the ruling Likud Party's "Iron Lady" who was re-appointed for a second term as education minister in 2001, was instrumental in removing the university academics' majority on the Council for Higher Education. She has been a vocal critic of the research universities.
"They have operated like a commercial cartel, protecting the interests of one social stratum," she said. "Academe has become an insular world. The community has raised a high wall around itself and has entrenched itself in the achievements of the past."
Academics now hold only 11 out of 25 seats. The others are held by five public figures and Ms Livnat (as minister), one student union representative and six college representatives.
Ms Livnat believed it was necessary to break the cartel to enable students from weaker socioeconomic backgrounds and those who in later life had not yet earned matriculation to get a higher education.
"Higher education is everyone's right," she said. "We cannot put a barrier in front of children, saying that those who can't go to university, can't get higher education."
Ms Livnat disagreed with the findings of the Winograd Committee, which agreed to the proposal to halve tuition fees for first-degree students for five years.
"Students who can afford to pay fully, should," she said. Others who were in need, should be helped, she said.
The cuts are concentrated on Tel Aviv University -which has a deficit of 123 million shekels -the Hebrew University and the Technion in Haifa, which account for "about 74 per cent of the overall deficit in the universities' budget", according to a report in Ha'aretz newspaper.
Ben-Gurion University has a projected deficit of 70 million shekels this year; Bar-Ilan University is about 40 million shekels in the red, while Haifa University and the Weizmann Institute have deficits of about 10 million shekels each.