Student fees are likely to rise for the first time since 1999 under a new regime announced in the New Zealand government's budget.
From this year, the government will set the maximum fee that institutions can charge students. Fees will be set in seven course categories.
A schedule includes indicative rates for the following two years and this will be adjusted annually by the estimated rate of inflation.
For the past three years, universities have grudgingly agreed to freeze the amount they charge students in exchange for an increase in the government's tuition subsidy.
Tertiary education minister Steve Maharey said the maxima had been set to ensure all public institutions could maintain their income. Most institutions would not need to raise their fees for 2004 by even the rate of inflation to achieve this, he said, because tuition subsidies would increase by 1.2 per cent in real terms.
But students are doubtful whether universities will agree. New Zealand University Students' Association president Fleur Fitzsimons said universities had previously argued the need for fee increases of up to 25 per cent.
She added that for engineering undergraduate students, the fee maxima schedule could mean an increase of up to NZ$833 (£300), or 18 per cent, on the average 2003 fee.
Maxima will range from NZ$3,900 for arts and social science courses to NZ$4,500 for science and NZ$10,000 for dentistry, veterinary science and medicine.
John Hood, chair of the vice-chancellors' committee, agreed with the slowing of the decline in tertiary funding over the past decade, but warned that the increases would not meet staff salary expectations or enable the purchase of major equipment.
"There remains a need to significantly boost the quantum of university revenue," he said. But Dr Hood dismissed the suggestion that institutions would set their fees at the prescribed maxima.
"Fee-setting is and should always be the preserve of university councils, acting in a collegial and consultative fashion," he said. "In that respect, universities do not welcome the fee maxima policy, as it represents a further intrusion into their capacity to manage their own affairs."
The student component of the funding system will increase by NZ$422 million over four years, with a 3 per cent increase next year and increases that match the rate of inflation in the following two years.
Postgraduate fees are exempt, although any increase of more than NZ$1,000 will require approval from the Tertiary Education Commission.