Most universities across the country don't see how a proposal for "flagship" courses is workable without devaluing existing degrees or creating a two-tier system.

Universities Australia's submission to the federal government's higher education review makes no recommendations on the fate of flagship courses, but notes the sector is split.

"While some members have indicated a preparedness to further explore the concept of 'flagship' courses ... the majority oppose the proposal," it states.

They are concerned about complex set ups, the likelihood of perverse outcomes, the potential to devalue existing degrees, and the potential creation of a "two tier" system, the sector's peak body says.

Universities Australia stresses the importance of higher education to the country's economy and pleads for no further cuts to per-student funding.

It says the government's discussion paper seems to view changes to higher education "almost exclusively against an objective of securing a budget saving" but evolution of the system also needs to respond to economic and labour market demands.

"We do not agree that this can be achieved at the same time as reducing the level of public investment in universities by $3.2 billion over the forward estimates, as currently reflected in the budget," Universities Australia says.

"The most basic requirement for a strong and sustainable university sector is adequate, predictable, sustainable investment."

Among its 12 recommendations, it also supports some changes to the HECS-HELP loan scheme including a moderate reduction to the minimum income level for repayments, provided there is a lower payment rate for anything below the existing threshold.

It also wants better targeted support to improve participation by disadvantaged groups.