The Federal Government was forced to come up with a new plan for university funding because it couldn't get its original version through the Senate.

The plan announced on Monday will save the Government $2.2 billion and is mostly based on changes that don't have to get through Parliament.

What does it mean for universities?

From next year, the money the Commonwealth pays to universities for students in bachelor courses will be capped at 2017 levels.

The freeze will stay in place for two years.

That means if universities want to accept more students into HELP or VET-funded positions, they'll have to figure out how to divide up the money they're already getting to accommodate any increased intake.

Will this make getting into university more difficult?

Yes, according to Universities Australia.

Catriona Jackson is the organisation's acting chief and she says it will be harder to get a university place from next year.

"Let's be absolutely clear a freeze is a cut and this is $2.2 billion worth of cuts to universities," she said.

"They are freezing funding for student places. If they are not funding a place it is very, very, very difficult for a university to offer a place, this is the way it's always been.

"This is a freeze on places, so if universities want to expand numbers — and a number of regional universities do want to because they're in an area of growing need for university degrees — then they will not be able to do that next year."

But the Government says it's all about being efficient and that universities have room in their budgets to increase enrolments if they want to.

What does it mean for fees students pay?

Originally, the Government wanted to increase student fees from next year but that idea has now been dumped.

So, no fee increases.

What about student loans?

The Government still wants students to pay back their loans sooner (once they start earning $45,000 a year).

That's higher than the original plan which was for repayments to kick in when income reached $42,000.

There will be a limit on loans

There will be a lifetime limit on how much students can borrow from the Government as part of their HELP or VET loans.

Until now, there was a limit on some student loans, but the new cap will apply across the board, affecting most university students.

Those new limits are:

$150,000 for students doing medicine, dentistry and vet science

$150,000 for students doing medicine, dentistry and vet science $104,440 for everyone else

A reprieve for New Zealanders

Under the original plan New Zealanders were going to face higher fees for university in Australia because they wouldn't be allowed to access government subsidies.

That's no longer happening. So, the arrangements for New Zealanders stay the same.

Some other notable points: