Education Minister Christopher Pyne rejects claims that the government's proposed rejig of university funding will drive up course costs for students.
Institutions which price themselves out of the market will have empty lecture theatres and tutorials, Mr Pyne said.
"Competition will drive prices down and students will be the winner in terms of quality and price," he told ABC TV on Sunday.
The comments follow speculation the government's slated cuts to university funding will bring hikes of up to 100 per cent for some undergraduate degrees.
University of Sydney analysis of a planned government reduction in course funding will mean fees for communications, social science, environmental and engineering degrees will skyrocket, Fairfax media reports.
A communications degree currently costing a domestic a student about $18,132, would carry a new price tag of about $37,000, the modelling suggests.
But Mr Pyne said some 200 universities across Australia will have to remain competitive in the education market and doesn't foresee an explosion in fees.
Despite the cost, students will still be able to borrow every single dollar from the government "at the lowest interest rate that student will ever see in any loan they will ever have in their lives".
Students enrolled in courses before the budget announcement will not be affected by the change, while those who have signed up since will be affected from January 2016.
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