State support for Japan's 80-plus denationalised universities is about to be slashed further - by ¥60 billion (£300 million) over the next five years - as part of the finance ministry's ¥11.4 trillion spending cuts.
Academics, who warned that this would make a further increase in tuition fees inevitable, will face an intensified struggle for research grants as money becomes tighter.
Over the past two years since denationalisation the universities have experienced a total cut in subsidies of ¥20 billion. From next year for five consecutive years, however, they face a blanket 1 per cent reduction.
Previous cuts were designed to minimise impact on research and education, by offering a new funding for "special projects". Some universities ended up financially better off as a result.
But the latest initiative means the total grant for each institution will be capped.
Annual tuition fees increased to 536,000 last year, making them among the highest in the world for government-funded institutions.
Despite a campaign by academics and students to reduce fees, the new cuts could push them even higher unless universities make up the shortfall with donations and endowments from the private sector.
Universities with strong science and technology faculties would be at an advantage in attracting industry funding, so institutions would inevitably shift resources away from liberal arts disciplines, academics said.
"This means there will be fewer research projects on Japanese classics, for instance," said an assistant professor at Niigata University.
A professor of accounting at Tokyo University said: "Smaller, less reputable universities in the province could go bankrupt in the long run.
"They will find it harder to raise private funding and the fees increase will drive students away."