Largely leaked details of the education budget suggest Higher Education Contribution Scheme fees will go up for undergraduates as the government allows universities to charge students more for their degrees.

This is music to the ears of ANU vice-chancellor Ian Young, who said successive cuts to higher education budgets over the past four years had reached crisis point and it was pragmatic to allow students to pay more for the benefits of higher education.

An efficiency dividend, brought in just over a year ago in the dying days of the Rudd government, had reduced federal funding to universities by more than $900 million over four years and Professor Young said the status quo could not remain.

Professor Young, chairman of the elite Group of Eight universities, has recently argued caps on student contributions for university courses should be raised to the same level as for international students – to be paid back through HECS.

The ANU was likely to raise its degree fees but would “value-add” to the education experience by providing students with smaller classes, quality teachers and hands-on research experience.

“I think the government is just being pragmatic in these things,'' he said. ''We have seen over the last four years the demand-driven system has grown the cost to the budget significantly, now either the taxpayer is going to have to pay that or the student is going to have to pay that or the system will become impoverished ... A slight change to the mix of what the taxpayer and the student affords is probably a good thing.”

But University of Canberra vice-chancellor Stephen Parker said such a move would leave students crippled with debt and would take Australia down the path of the US – where education costs are a major disincentive for going to university.

Professor Parker said he was speaking out about the recommendations of the recent Commission of Audit, which proposes a change to the mix of federal student contributions within current funding levels as well as allowing universities to charge students more for degrees, because the issues were supposed to be debated for 12 months and their ramifications would be massive.

Professor Parker said it was “unethical for a bunch of middle-class blokes, who largely went through university free, to impose crippling debt levels on generations coming behind us”.

He hoped the budget would make a number of issues clearer: whether HECS places would be permitted for new higher education players, and whether sub-degree courses would become HECS-supported. This could open new markets for the University of Canberra to offer diplomas and associated degrees.

Both vice-chancellors welcomed the news that the budget would support university-led research through the National Collaborative Research Infrastructure Strategy and the continuation of Future Fellowships, which support mid-career research academics.

The ANU has about 150 Future Fellows who face a funding cut-off beyond next year.

Professor Young said he was delighted the government had seen the national benefits of funding research in such a tight budget while Professor Parker said the NCRIS funding in particular would allow Australian research to be globally competitive and was “good sense”.

Professor Young said the ANU would not be immune to broader issues challenging Canberra, or cuts to the public service.

“At the postgraduate level we have quite lot of masters students sponsored by government departments. So will these departments have training and education budgets into the future? We will have to wait and see.

''Also, the ANU has been heavily involved with AusAID in the delivery of their foreign aid program, and we do not know how those cuts are going to flow through.”

But Professor Parker said Canberra was less reliant on the public sector than when the Howard government slashed services in 1996.

He believed that during an economic downturn people would possibly turn to universities to retrain and upgrade their qualifications.

“My message to the ACT government would be to invest in education in order to bring external money into the territory. I think this budget will be a test of our resilience but I do believe we are resilient.”