Students will pay more in a deregulated university system but the father of HECS says government can limit how much.
Bruce Chapman has suggested a system where government subsidies taper off if universities lift fees past a certain level.
He and colleague David Phillips believe their plan gives universities enough price flexibility but discourage skyrocketing fees.
That would be good for students compared with the deregulated system the government wants, Professor Chapman told the Senate's education committee on Friday.
"The consequences for the students will be that they will face lower prices than they otherwise would," he told a hearing in Canberra.
"This is aimed at institutional behaviour and not consequences for students."
The income-contingent HECS loans system muted price signals so students who wanted to head to university were likely to do so no matter the cost.
"The alternative is not getting a degree," Professor Chapman said.
"They wanted to be a vet, they wanted to be an accountant, they wanted to be a lawyer, et cetera, and those kind of (fee) changes will not affect their aspirations very significantly."
The Chapman-Phillips plan has been labelled a tax and compared with the mining super profits tax, but Prof Chapman said that wasn't accurate because it wasn't designed to raise money.
The committee, which is holding hearings on Friday for two separate inquiries into the higher education reforms, will also hear from the National Tertiary Education Union, which argues the Chapman-Phillips plan would add unnecessary complexity to the system.
The union opposes deregulation and wants the Senate to reject it.
Victoria University vice-chancellor Peter Dawkins will tell the committee there's a "third way" that gives some price flexibility with appropriate safeguards for students.
Similar to the Chapman-Phillips proposal, Prof Dawkins is advocating managed deregulation with a stronger equity package and more oversight than the government plan.
