Universities can offer unlimited places to full fee-paying students after parliament approved the federal government's controversial budget changes to higher education.
But universities have been warned not to offer courses as full-fee-only degrees, with the government declaring it will impose new measures in funding agreements to ensure universities do not shut HECS students out of the top courses.
The institutions would require ministerial approval to offer full-fee-only courses, which Education Minister Julie Bishop said "will not happen".
"I will not allow universities to manipulate commonwealth supported places to artificially increase the number of domestic full-fee paying students," she said today.
The new provisions, announced in the Senate by Arts Minister George Brandis, were a last-minute bid to ensure Nationals senator Barnaby Joyce supported the removal of caps on the number of full-fee students who can enrol in tertiary courses.
Senator Joyce said he was satisfied with the requirements.
"I'm happy that the discussions and assurances that I've been seeking over time and have received in correspondence are now on the Hansard," he said.
"The issue of universities manipulating HECS places has been dealt with.
"(The government) were concerned there was a risk I wouldn't vote for it."
The Queenslander had been mulling over whether to support an ultimately unsuccessful Australian Democrats amendment that would have blocked the abolition of caps on full-fee students.
Until now, full-fee-paying places have been capped at 25 per cent in most courses.
Labor condemned the change and reiterated leader Kevin Rudd's pledge to phase out full-fee degrees for domestic undergraduates by 2009.
The passage of the Higher Education Legislation Amendment (2007 Budget Measures) Bill through the Senate also establishes the $5 billion Higher Education Endowment Fund - the centrepiece of the May budget aimed at neutering Labor's "education revolution".
The perpetual fund will help pay for capital works on university campuses.
The legislation slashes from 12 to seven the number of "clusters" - groups of courses - under which the commonwealth funds HECS students, while allowing universities to jack up fees in commerce, economics and accounting courses.
Universities have praised the legislation, saying it will give them greater flexibility to respond to student demand and compete for fee-paying students.
Although Labor supported much of the overall bill, it was "wrong and foolish" to remove the cap on full-fee places, opposition science and research spokesman Kim Carr said, predicting it would lead to a 20 per cent increase in full-fee-paying students.
"We've seen students who can afford to buy their way into courses with much lower entry scores than those of their peers in publicly funded places," Senator Carr said.
Family First senator Steve Fielding said the change could erode fairness.
"The bill could pave the way for universities to be able to offer degrees only to full-fee students. It is a huge concern," he said.
Democrats senator Natasha Stott Despoja said the government's foreshadowed new requirements in university funding agreements was "policy on the run".
National Union of Students president Michael Nguyen said the government had given universities "open slather for full-fee degrees".
"The ramifications for a young person wanting to get into university are that they should probably look forward to paying up to $100,000 to get into a course," he said.
