Students will be asked to pay more for higher education under the Federal Government's proposed legislation introduced into Parliament today.

Education Minister Christopher Pyne introduced the legislation on Thursday morning, saying it is a "good deal" for students.

The main aspects include the deregulation of university fees and changes to interest rate arrangements for student loans.

Mr Pyne says the legislation will ensure Australian universities can compete globally by setting their own course fees and choosing which courses they offer.

"Deregulation is the only way to respond to what students and employers want," he told Parliament.

"It is the only way to set our universities free to ensure they can deliver what they need.

"It is the only way to ensure Australia is not left behind.

Budget measures for Higher Education Reduce repayment threshold for HELP (Higher Education Loan Program) debts from an annual wage of $51,309 to $50,638 from July 1 2016; increase interest rates on the loans to the Government bond rate which is capped at 6 per cent. These two measures will save $3.2 billion over four years from 2014-15.

Reduce repayment threshold for HELP (Higher Education Loan Program) debts from an annual wage of $51,309 to $50,638 from July 1 2016; increase interest rates on the loans to the Government bond rate which is capped at 6 per cent. These two measures will save $3.2 billion over four years from 2014-15. Deregulate fees to allow universities, TAFEs and colleges to charge market-driven rates for courses. This will save $1.1 billion over three years from 2015-16, representing a 20 per cut in federal government funding for course fees.

Deregulate fees to allow universities, TAFEs and colleges to charge market-driven rates for courses. This will save $1.1 billion over three years from 2015-16, representing a 20 per cut in federal government funding for course fees. Commonwealth scholarships for disadvantaged students will be funded by contributions from higher education providers, who will be required to contribute $1 out of every $5 raised through fee increases.

Commonwealth scholarships for disadvantaged students will be funded by contributions from higher education providers, who will be required to contribute $1 out of every $5 raised through fee increases. Open up HELP loans to an additional 80,000 students at TAFEs and colleges, costing $371.5 million over three years.

Open up HELP loans to an additional 80,000 students at TAFEs and colleges, costing $371.5 million over three years. Remove the 25 per cent loan fee on FEE-HELP loans, which are available for domestic fee-paying students whose places are not subsidised by the Government. Remove the 20 per cent loan fee on VET FEE-HELP loans, which is for vocational students studying at diploma level and above. This measure will cost the government $723.2 million over 3 years.

Remove the 25 per cent loan fee on FEE-HELP loans, which are available for domestic fee-paying students whose places are not subsidised by the Government. Remove the 20 per cent loan fee on VET FEE-HELP loans, which is for vocational students studying at diploma level and above. This measure will cost the government $723.2 million over 3 years. Abolish HECS-HELP Benefit, which supported certain graduates to work in specified locations - saves $87.1 million over three years.

Abolish HECS-HELP Benefit, which supported certain graduates to work in specified locations - saves $87.1 million over three years. Cut $173.7m funding over three years to the Research Training Scheme, allowing universities to charge doctoral students to cover the gap.

Cut $173.7m funding over three years to the Research Training Scheme, allowing universities to charge doctoral students to cover the gap. Cut $121.1m over five years for Higher Education Reward Funding paid when enrolment targets are met.

Cut $121.1m over five years for Higher Education Reward Funding paid when enrolment targets are met. Impose a 3.25 per cent efficiency dividend to the Australian Research Council in 2015-16, saving $74.9 million over three years.

"It is a one-off opportunity."

As part of the changes, the Government says students will be asked to make a bigger contribution to the cost of their education.

Indexation of student loans will be changed from the Consumer Price Index to the Treasury bond rate, capped at 6 per cent.

"Given the scale of costs now present in the higher education system, it is time students picked up a fairer share of the tab for these interest charges," Mr Pyne said.

"It's a good deal. It's the best deal an Australian will ever get."

The Education Minister is confident he can negotiate with Senate crossbenchers to get the package through Parliament by November.

"If we don't act and act now, we risk Australia's higher education system falling into a downward spiral towards mediocrity," he said.

Opposition higher education spokesman Kim Carr says the changes have been rushed and will burden students with crippling debts.

"This is a program for $100,000 university degrees and a generation of debt for tens of thousand of Australian families," Senator Carr said.

He also accused Mr Pyne of threatening cuts to research funding if the higher education changes do not get through the Parliament.

"This is a minister who's quite prepared to say anything and do anything to get this warped program through the Senate," he said.

Clive Palmer says his Senators will oppose the higher education overhaul.

Asked if there was any part of the package he could support, he said. "Nothing, absolutely nothing."

Fears over 20pc funding cut

Universities Australia has urged the Senate to support the Government's higher education package with some amendments.

The group's chief executive Sandra Harding says she supports fee deregulation, but is worried the changes to student loans will hurt people on lower incomes.

"So what we're wanting to do of course is have the Government reconsider that but particularly urge the senators to have a think about that and reconsider that to make the proposal here far more acceptable for students and their families as well," she said.

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Ms Robinson is also concerned about the move to cut Commonwealth funding to universities by 20 per cent.

"Twenty per cent is a big amount to come out of the higher education sector, it equates to about $1.9 billion," she said.

"And that's off the back of earlier cuts that we know have been introduced last year that amount to $3.3 billion."