Axeing tuition fees would be "politically unacceptable" in Northern Ireland because of equality legislation, according to Sean Farren, the province's minister for higher and further education.
Dr Farren, speaking at a conference on student funding organised by the National Union of Students-Union of Students in Ireland, said there had been no real option to abolish fees or the loans system. It would have been possible to axe fees only for students at Northern Ireland higher education institutions and not for those studying on the mainland.
"I was advised (that this) would, in all probability, be in breach of equality legislation given that the more than 30 per cent who study elsewhere would not be covered by such a provision," he said.
The Department of Higher and Further Education, Training and Employment is governed by local wide-ranging legislation to promote "equality of opportunity".
Dr Farren dismissed criticisms that fees and loans were a deterrent to higher education entry and said Northern Ireland participation continued to grow, with 45 per cent participation rate for young people and lower than average drop out rates.
Student support reforms had been necessary given evidence of student hardship and low levels of participation from lower income groups, he said.
Dr Farren's student support package, which should cost £65 million over three years, included access bursaries of up to £1,500 for full-time undergraduates whose family income is £15,000 or less. These would be mirrored by 3,000 discretionary bursaries for further education students.
He raised the family income threshold for fee exemption to £20,000, which meant that half of higher education students would no longer be liable to pay fees.
He had proposed dropping fees in a few key skill areas for further education students over 19. A much larger range of vocational courses will now be exempt. Northern Ireland is also leading the United Kingdom in extending individual learning accounts to include part-time higher education courses.
"I have made no secret of the fact that I would have wished to go much further than I have," Dr Farren said. "However, it is my duty as minister to come forward with proposals that have careful regard to affordability and the need to ensure that any additional resources are targeted on clear and pressing priority areas."
The universities welcomed Dr Farren's approach to fees. Richard Barnett, Ulster University's pro vice-chancellor for teaching and learning, told the conference that the minister "had got things just about right".
Cutting fees completely would have given a double subsidy to students from better-off families, he said. First, they would no longer have had to pay fees. Second, given public expenditure constraints, abolishing fees would have resulted in a drop in the number of higher education places.
Professor Barnett said that because universities tend to ration the places available by A-level or other exam scores and because those from better off families tend to perform better in examinations, due to family support rather than ability, fewer places would have been available to those from lower income families.
The Northern Ireland Assembly's committee for higher and further education, training and employment wanted to see a package on the lines of Scotland's Cubie proposals, axeing upfront fees and introducing a graduate endowment scheme.
Committee chairman Esmond Birnie said the Northern Ireland deal was less generous than the Scottish Executive's proposals for £2,000 bursaries. "There is also a less generous rate of withdrawal of that support as family income rises. The minister will argue affordability and 'targeting social need' considerations, but I think all this can be looked at again," he said.
Deferred contributions through a graduate endowment scheme were the best long-term safeguard against top-up fees, Dr Birnie said. He said it was an incentive to remove upfront tuition fees, as once fees were conceded, there could be slippage.
Professor Barnett said no institution that took social inclusion seriously could support top-up fees. "Thankfully, they are currently off the political agenda and, as far as the University of Ulster is concerned, they are off our radar map."
He urged students to lead the campaign for more funding for higher education and condemned Universities UK's failure as a lobbying body.
"It is now such a diverse group that it is no longer efficient or effective as a pressure group, if it ever was," he said.