One elite university estimates it will lose millions of dollars each year unless it puts up tuition fees to cover the loss of government subsidies.
University of Sydney vice-chancellor Michael Spence is yet to decide what to do in 2016, including whether or not to increase fees across the board or just for specific courses.
But the government's planned cuts will hurt if the uni does nothing.
The Faculty of Arts and Social Sciences estimates it could lose about $10.3 million each year if fees remain unchanged and we choose not to enrol more students, Dr Spence wrote in a letter to staff.
The government will slash its contributions from 2016 but allow universities to charge whatever they like.
Students are strongly opposed to the plan.
While Prime Minister Tony Abbott will not guarantee tuition fees won't double he insists no-one will have to pay "a cent upfront" because HELP loans cover initial costs.
Increased competition in the market would mean some fees go up but others may go down, he said.
Some sector analysts have speculated the cost of a degree could soar to $200,000.
But Australian National University vice-chancellor Ian Young doesn't believe the cost will be anywhere near that high.
"I suspect institutions will be cautious rather than go with grandiose fee levels in the initial years," he told AAP.
Opposition Leader Bill Shorten says the changes will make it harder for working class and middle class kids to go to university.
Dr Spence said the requirement for universities to spend 20 per cent of extra fees on scholarships was only a partial response to the problem.
An education at Sydney University should be attainable for the most promising students, whatever their social or cultural background, he said.
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