The economy could lose billions over the next two decades because of a freeze in university funding designed to save costs, new modelling shows.
Universities expect 10,000 fewer students to be enrolled this year because of the two-year freeze announced by the federal government in December.
Funding will be kept at 2017 levels until 2020 to save $2 billion.
But Universities Australia says the short-term savings could cost the national economy up to $12 billion over the next 20 years.
Even best-case scenario research they've commissioned predicts a $6.9 billion hit on gross domestic product and $2.2 billion in lost tax revenue.
"It's a simple equation - less university funding means fewer skilled graduates, a hit to labour market productivity, and less tax revenue for government," UA chief executive Belinda Robinson said.
Modelling by Cadence Economics says every Australian missing out on university qualifications costs the national economy $471,000 and causes the government to lose out on $152,000 in tax revenue.
Their research takes into account workforce productivity where fewer workers have university qualifications, and reduced individual earning potential.
"These findings demonstrate that, even in the most conservative scenario, the short-term fiscal savings to government are offset by the long-run cost of reduced tax receipts - and are substantially less than the long-run cost to the economy," the report states.
