University lecturers and students reacted with dismay on Sunday after a group of leading British academics took a step towards the establishment of an elite US-style university system in the UK by launching a new private college offering £18,000-a-year courses.

AC Grayling, a professor of philosophy at the universities of London and Oxford, will welcome next year the first students to the New College of the Humanities to study for degrees in English, philosophy, history, economics and law taught by academics from Harvard, Princeton, Oxford and Cambridge.

There is a starry lineup of professorial talent: Richard Dawkins will teach evolutionary biology and science literacy; Niall Ferguson will lecture on economics and economic history; and Steven Pinker will teach philosophy and psychology.

Inspired in part by the business model of American Ivy League universities where $40,000 (£24,000) annual fees are not unusual, New College will cost double the maximum tuition fee allowed in government-funded universities. It is set up to deliver a profit to its shareholders who include the professors and a team of wealthy businessmen who have bankrolled the plan.

"At £18,000 a go, it seems it won't be the very brightest but those with the deepest pockets who are afforded the chance," said Sally Hunt, general secretary of the lecturers' association, the University and Colleges Union.

"The launch of this college highlights the government's failure to protect art and humanities and is further proof that its university funding plans will entrench inequality within higher education."

Grayling said the decision to set up New College came after the government cut subsidies to humanities and social science subjects and introduced increased competition by allowing universities to charge annual tuition fees of up to £9,000.

He admitted the business model might seem unusual for a group of professors who are, for the most part, "pink around the gills and a little bit left of centre", but he said government cuts meant going private was the only way to provide a high-quality humanities education and he predicted more universities would go private.

"It is the economic reality," he said. "The £9,000 cap is completely unsustainable. The true cost is way more and that ceiling is going to have to be burst. Other universities might also think 'either we sink or go independent'. Almost all of [the professors signed up] have served our time with decades in public sector higher education and we have seen it get more and more difficult. It is quite a struggle now to see into the future with how we can cope with these cuts. Either you stand on the sidelines deploring what is happening or you jump in and do something about it."

Other teachers signed up include Sir David Cannadine, a history lecturer at Princeton; Ronald Dworkin QC, a leading constitutional lawyer teaching at University College London and New York University; and Steve Jones, a leading geneticist. Lawrence Krauss, professor of earth and space exploration and physics at Arizona state university, who has advised Barack Obama on science policy, will teach cosmology.

The college sets out to "inspire the next generation of lawyers, journalists, financiers, politicians, civil servants, writers and teachers" and every student must take extra classes in ethics, science, literacy and logic and critical thinking as well as a course in practical professional skills.

Scholarships will be granted to one in five of the first 200 students. An endowment fund is being established to try to increase that ratio to one in three.

Aaron Porter, president of the National Union of Students, said the move showed that "an education in humanities from some of the leading thinkers in the world will be restricted to the richest" and that academics would be removed from the public system.

"This institution has been created as a reaction to the government's swingeing cuts to higher education funding that have seen all teaching funding removed from many humanities subjects," he said. "If the government does not hit the brakes on this rushed reform and reverse the cuts to funding, the UK's currently world-leading public universities will be irreparably damaged."

Gareth Thomas, Labour's universities spokesman, commended Grayling for his initiative, but added: "It is a sad reflection of the scale of government cuts in higher education that it is taking a private initiative to drive new investment in arts, humanities and social sciences courses.

"When independent experts are warning that 80% cuts in funding are likely to lead to large numbers of humanities courses being axed I worry that high fees will deter many of the brightest and best from studying those arts, English and humanities courses that remain."

The college aims to attract candidates with at least three A grades at A-level with the promise of more direct teaching than at traditional universities. The student-teacher ratio will be better than 10 to one and there will be 12 to 13 hours' contact with teachers each week.

Graduates will come away with a degree from the University of London and a separate diploma from the college to reflect the additional course that includes practical professional skills such as financial literacy, teamwork, presentation and strategy.

One of the backers is Charles Watson, chairman of the City PR firm Financial Dynamics. He said: "Higher education in the UK must evolve if it is to offer the best quality experience for students and safeguard our future economic and intellectual wealth. New College offers a different model – one that brings additional, private sector funding into higher education in the humanities when it is most needed, and combines scholarships and tuition fees."

Grayling said the organisation had raised "a very significant" amount of money, thought to be more than £5m, to fund the college .

One third is owned by Grayling and the 13 other founding professors, while shares are also owned by a group of wealthy businessmen. They include Jeremy Gibbs, former chief executive of specialist venture capital consultancy, Matthew Batstone, former marketing chief of the Economist Group and a trustee at Bedales, a £30,000-a-year boarding school, and Roy Brown, the founder of Metier Management Systems which pioneered computer project management systems in the 1970s and 1980s.

Intense degree

The professors at New College are promising an intense, three-year education in exchange for £54,000. Before they have even got to the library or started writing an essay, students will be expected to attend at least 13 hours a week of lectures, one-to-one tutorials and seminars.

They will not only be expected to master their chosen subject, whether law, economics and economic history, or a comination of history, English literature and philosophy, but each of them must take lessons in science literacy from Richard Dawkins and Steve Jones, applied ethics from Peter Singer as well as a module in logic and critical thinking.

The big-name professors, who include Niall Ferguson and Linda Colley, will together give 110 lectures a year, which any paid-up student can attend. You could drop in to see Niall Ferguson expound on economic history in the 20th century while history professors Sir David Cannadine or Linda Colley will talk on course subjects ranging from "The birth of western Christendom AD 300-1215" to "Material world: culture and environment in the last millennium". Law lectures will come from Ronald Dworkin QC and Adrian Zuckerman.

Every student will have a one-to-one tutorial in their main subject each week in which they will be grilled on their latest essay, though these will not be conducted by the star names, but by a professional teaching staff that is currently being recruited.

And that is not all. A further course in professional skills is supposed to give you an edge in the job market and features sessions on reading balance sheets, corporate governance, leadership, marketing and sales and entrepreneurship.