Any vice-chancellor proposing that undergraduates pay more towards the cost of their university education is not expecting to win a popularity contest with students, their parents or the federal government.

So why are a number of vice-chancellors urging the government to at least consider a limited form of fee deregulation? Don't we care about our students? Are we simply being greedy?

For decades universities have been underfunded and increasingly reliant on income from international students to close the gap. Credit:Tamara Voninski

No, we are being realistic. What's been largely lost in the heated debate over fee deregulation is the urgency of the financial situation facing our universities. Revenue is simply failing to keep pace with costs, as evidenced by the number of universities now engaged in redundancy programs in an effort to reduce spending.

For decades universities have been underfunded and increasingly reliant on income from international students to close the gap. The soaring dollar and increased competition from other countries have put this revenue at risk. At the same time costs including wages are increasing at more than 4 per cent, while government funding is indexed at 3.8 per cent. In these circumstances my own university, UNSW, could face accumulated operating losses of more than $90 million over the next three years. Other universities are in a similar situation.