Australia's public universities face increased competition from a growing number of private institutions offering degree and diploma courses.
Glyn Davis, chair of the Group of Eight research-intensive universities and head of Melbourne University, described the rise of the private sector as a "fundamental threat to public universities".
Professor Davis warned last week that if students began to prefer the private alternatives, then higher education would follow the same path as the nationwide shift to private schools.
Competition from local private colleges will soon include overseas institutions with the establishment of the first American campus in Adelaide and the likely registration of two foreign universities in Sydney.
Carnegie Mellon, the private American university, begins offering masters degree programmes next month, while the Washington Post -owned Kaplan University has made a A$55 million (£23 million) takeover bid for Tribeca Learning, a Sydney-based financial services education group.
Tribeca has signed an agreement with Heriot-Watt University for its Edinburgh Business School to offer online MBA degrees. Both the Kaplan and Heriot-Watt plans await government approval.
Mark Wessel, dean of Carnegie Mellon's Business School, said: "Not only do we have applications from Australia and countries in the Asia-Pacific region but also from the Middle East, Africa, Europe and the US."
Aided by the federal Government's new loan scheme, Fee-Help, private colleges boosted enrolment in their higher education courses to a high of 45,000 last year.
More than 30 private higher education institutions are now able to offer the Fee-Help loans and are using their availability to promote their courses.