Simon Birmingham unveiled the government's revamped university package in Canberra on Monday night.
It includes a $2.8 billion cut to universities and students paying more for degrees under the Turnbull government's overhaul of funding arrangements.
As well, part of future university funding will be linked to performance measures such as more transparent admissions processes and better student retention and success.
Senator Birmingham says the cut, which will be imposed via a two-year efficiency dividend on teaching funding only, represents less than four per cent of total university revenue.
Under the planned changes, students studying a four-year bachelor degree will pay between $2000 and $3600 more over the duration, and all can be deferred on the income-contingent HECS-HELP loan scheme.
At the maximum, this represents a $17 a week fee increase across a four-year degree, Senator Birmingham says.
Once students start earning, the repayment threshold for their loans will kick in at $42,000 from mid-2018 - a substantial drop from the current $55,000 threshold.
Watch: Simon Birmingham announces the changes
Senator Birmingham characterised it as "recalibrating what is one of the world's most generous student loan systems".
And student fees will be at most $75,000 - for the priciest six-year medical degrees.
The May 9 budget will hold a range of other changes, including allowing universities to enrol as many students as they want in sub-bachelor courses and get government funding, provided those students haven't completed a higher education qualification before.
The government will also set up a new $37 million-a-year fund offering students postgraduate scholarships at any institution they choose.
Senator Birmingham said the government wanted its changes to boost quality, enhance choice, drive innovation and improve equity of access while delivering financial sustainability.
"Students are the reason we have universities. Students are the reason we fund universities," he said.
"We need to nurture their progress, expand their horizons, provide them with opportunities and ensure that they have the information, resources, support and encouragement they need to succeed."
But some students aren't impressed.
About a dozen rallied outside the Canberra hotel where the minister made the announcement, chanting "Birmingham go to hell, take your uni cuts there as well".
National Union of Students president Sophie Johnston said the package was as to be expected - "a war on students and young people".
"We're quite concerned about the increase in student contributions," she told AAP, adding there was no silver lining on university cuts.
Universities Australia chief executive Belinda Robinson says the cuts run counter to the government's innovation and skills agenda which aims to keep highly-skilled jobs in Australia in a competitive global economy.
She pointed out the further cuts come on top of $3.9 billion slashed since 2011, and are in addition to a $3.7 billion proposed cut to university infrastructure funding.
However, she praised some of the other initiatives including expanding the demand-driven system to university diplomas and advanced diplomas, focus on work experience placements and continuation of a funding program for students from disadvantaged backgrounds.
