Students are bracing themselves for 3 percent fee rises next year, even though inflation is below 1 percent and competition for enrolments is growing.

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Polytechnics and universities say rising costs and static government funding for most courses are behind their decision to raise their charges by the maximum allowed.

It will add about $150-$190 to most fees, which generally run to between $5000 and $6000 per year of full-time study, though some subjects cost more than $7000 per year.

Union of Students' Associations president Rory McCourt said students had become accustomed to the annual increases.

He said even though there were fewer school leavers to go around, few, if any, institutions were dropping their fees or holding them steady in order to attract more students.

He said that was because institutions - especially universities - worried low fees would be seen as an indicator of poor quality.

Mr McCourt said, instead of competing on price, tertiary institutions spent more on marketing in order to attract students.

But he said it would end in tears for some institutions.

"In the next few years, we're going to see an absolute scramble from institutions. All of them think they can buck the trend, beat the market, but the reality is that they can't - not everyone can be winners.

"So we need to have a really rational conversation and talk about how many universities we do need, how many polytechnics, who's going to have students from where so that we don't have massive redundancies across the sector, students missing out on really important courses."

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However, Victoria University vice-chancellor Grant Guilford said it was not that bad.

"When people are worrying about this, they're thinking about only one segment of university students, that's the domestic school leavers, which have dropped very slightly in terms of numbers so we're talking several thousand across the country but in the context of 50-odd thousand undergrad students."

Professor Guilford said Victoria was raising its fees by 3 percent next year because its costs were increasing faster than the rate of inflation.

And he said, rather than spending more on marketing, it was spending that money more effectively.

The Open Polytechnic has chosen not to raise its fees at all next year.

Its chief executive, Caroline Seelig, said that was because it could afford to, and not because it was competing for students.

"We're in quite a different place to most of the other polytechnics and universities because 18- to 21-year-olds aren't our natural learner constituency.

"Our learners tend to be older, part-time, in jobs, maybe training for another job while raising a family, so we're quite a different demographic set to the others."