Social work and psychology students will likely be spared looming university fee hikes, with the Nationals claiming a major policy win over their Liberal stablemates.
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Junior education minister Andrew Gee led an internal rebellion to save mental health students from increased fees.
He wanted the courses treated as allied health rather than humanities, putting them in a lower cost band.
After an indiscrete internal brawl, Education Minister Dan Tehan has agreed.
"We have made sensible amendments to the legislation after listening to the constructive feedback provided during the consultation process," he said in a statement on Tuesday.
Mr Tehan is trying to more than double the cost of humanities degrees in a bid to steer students towards maths and teaching.
His proposed reforms have been widely panned by universities, educators and opposition parties.
Unusually, Mr Tehan also copped flak from the Nationals, who are meant to be on his side.
Mr Gee also raised concerns a $5000 tertiary access payment would create a rural "brain drain" by enticing country kids to the big cities.
The legislation, which cleared the coalition joint party room on Tuesday, will be amended to allow regional universities to offer their students the payments.
"We think it's a winner and we think that it helps bridge that great divide between the city and the bush," Mr Gee said.
Mr Gee also claimed to have secured a win by ditching a deadline for university students to finish or face higher fees.
He said the original proposal would have given students until the start of 2024 to complete their courses.
However, this grandfathering measure was not included in the draft bill.
"There is no expiry date on the grandfathering in the legislation or anywhere else," an education department spokesperson told AAP.
The National Tertiary Education Union, which represents university workers, described the changes as a minor reshuffle of a terrible bill.
"If this legislation passes, a generation of students will enter the workforce with an insurmountable debt," NTEU national president Alison Barnes said.
"It is inconceivable that we would load students with a huge financial burden in the midst of an economic crisis.
"The Senate must reject this attack on the next generation."
Labor has described the proposed university reforms as friendless and members of the Senate cross bench have also raised concerns.
"It's well past time that Scott Morrison dumped his plan to make it harder and more expensive for Australians to go to uni," opposition education spokeswoman Tanya Plibersek said.
The legislation will likely be sent to a Senate committee for scrutiny.
Australian Associated Press
