A FOUR year university degree will cost students $16,349 more if the government’s plan to deregulate university fees and slash funding goes ahead, according to Parliamentary Budget Office estimates described as conservative.

The latest PBO modelling predicts if allowed to set their own fees universities would bump up tuition by 40 per cent next year to compensate for proposed Federal Government funding cuts.

This means Band 3 courses — including law, economics and medicine — which cost HECS-HELP students $10,400 a year in 2016 would cost $14,616 in 2017.

Student contributions for Band 2 courses such as maths, science and engineering would increase from $8917 to $12,484, with Band 1 courses, including education, arts and psychology, rising from $6256 to $8758.

The PBO predicts universities would increase fees by two per cent each year after 2017.

Assuming, without deregulation, fee increases were also limited to two per cent a year, analysis shows students starting a four-year degree in 2017 would end up between $9796 and $16,349 worse off.

This is understood to be the best-case scenario, with the Opposition claiming the full impact of deregulation would be far worse and the PBO describing its methodology as “conservative”.

Under current arrangement’s fees for HECS-HELP students are subsidised by the Federal Government, with student contributions capped at an amount set by the government.

Education Minister Simon Birmingham revealed in October plans to remove the cap had been pushed back until 2017 after repeatedly failing in the Senate.

Despite industry speculation the proposal was now off the table, Senator Birmingham confirmed yesterday it remained the government’s policy.

“I am continuing to consult widely with the sector, colleagues and students on higher education reform and will have more to say before the election,” he said.

He said the cost of university funding had grown at twice the rate of the economy since 2009, but the government acknowledged “we must ensure the higher education system is sustainable for all those generations of students yet to come.”

Opposition education spokesman Kim Carr said the PBO had “seriously underestimated” the impact of deregulation, suggesting fees would likely double or treble.

“That means a serious blow out in the burden of student debt, which is unfair and unnecessary,” Senator Carr said.

According to the PBO’s report, released this month, the cost of HELP loans on the Budget will balloon from $1.7 billion in 2015-16 to $11.1 billion by 2025-26.

Universities Australia chief executive Belinda Robinson said she believed the 20 per cent funding cuts proposed in the 2014-15 Budget would see fees increase by 30 per cent to “offset that reduction and maintain the quality of education expected by students, their families and employers”.

Regional Universities Network chair Jan Thomas said: “If there is a substantial decrease in the amount of Commonwealth subsidy for any particular program then, yes, the universities would need to look at making that up. Otherwise you’re going to be significantly underfunded in an environment where there has already been chronic underfunding over some decades.”