Welsh universities could be paid as little as £586 per student by the Assembly Government in compensation for not introducing top-up fees of up to £3,000-a-head next year.
Documents supplied by the Assembly to The Times Higher under the Freedom of Information Act indicate that Welsh civil servants are considering providing Welsh institutions with extra income of between £22 million and £31 million in lieu of top-ups in 2006.
With an estimated 37,500 students entering Welsh higher education who would be liable to pay the variable fees, the compensatory sum is worth between approximately £586 and £826 per student.
The Assembly has had to sanction compensation because of a promise from Jane Davidson, the Welsh Education Minister, not to allow variable fees until 2007.
A document that attempts to quantify the expected "income foregone" by the Welsh sector says the proposed additional funding takes into account an average £300 per student that would be spent on bursaries under a variable fees system.
But even on this basis, and with the addition of the current £1,200 fixed fee, the extra money would leave Welsh institutions out of pocket by between £25.3 million and £34.3 million in total. This amounts to a loss of between £674 and £914 per student.
The model also does not take into account an expected influx of "fee refugees" to Wales from England in 2006.
Welsh vice-chancellors said this week that the amount was not enough. A spokeswoman for Higher Education Wales said: "The bottom end of that estimate is a long way off what is required."
Whether the top end is enough will depend on what happens in England and whether institutions are required to offer bursaries.
"If they are, then - even at the top end of what they are considering - it will not be adequate," the spokeswoman added.
In a letter accompanying the documents, Glynis Wilson, executive officer in the Assembly's higher education division, says a working group, which includes representatives from the sector, has been set up to consider the issue.
"Before we can take this work much further we will need to supplement our earlier calculations with estimates that take into account the latest information we have on fee levels being charged in England," she says.
In a letter to Teresa Rees - the Cardiff University pro vice-chancellor who is heading a review of fee options from 2007 - the Education Minister says her "starting point" for distributing the supplementary income is that it must be linked to the Assembly's agenda for increasing mergers and collaboration in Welsh higher education.
The Higher Education Funding Council for Wales has said it will need to know how much extra funding is available by October.
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