If the Senate won't pass his higher education overhaul, Christopher Pyne sees only two alternatives: cutting student numbers or cutting research funding.
Neither is palatable, the education minister told the university sector on Wednesday.
The Senate is likely next week to debate the deregulation package, which includes letting universities set their own student fees and expanding government funding to private providers.
Mr Pyne wants it to go to a vote before the end of March - after then parliament rises until budget day.
The contentious bill will end "the rollercoaster ride of surge and savings", he says.
"If the Senate rejects this, the system still needs to be made affordable," he told a Universities Australia dinner in Canberra.
"There are only two other choices: capping the demand driven system, which is socially regressive, or reducing research funding, which has bad economic consequences."
The minister believes his opposition counterpart Kim Carr wants to re-cap places.
Mr Pyne is continuing to talk to crossbench senators, whose votes are vital to securing passage of the legislation.
He again indicated he's open to compromise if proposed changes are well argued and sensible.
But he cautioned some parts of the package were not up for grabs.
Universities Australia chief executive Belinda Robinson said while the numbers in the Senate at the moment do not look great for the government, she wouldn't be surprised if it still managed to pass the bill.
