Australia's higher education system is not in crisis and there is no compelling case for students to pay more for a degree, the vice-chancellor of one of the nation's most prestigious universities says.

In a dramatic break with the longstanding position of his fellow Group of Eight vice-chancellors, University of NSW vice-chancellor Ian Jacobs said higher fees are not necessary for Australia to have a high quality university system.

"There is no crisis in Australian higher education," Professor Jacobs told Fairfax Media.

"Our system is the envy of the world.