The creator of the HECS student loan scheme has warned university degrees will cost up to three times as much, leaving students with $120,000-plus loans, under the deregulated system proposed in Tuesday’s budget.

Under budget measures, universities will have the power to set their own fees and the government will wind back its contribution to degree costs by one-fifth from 2016.

Australian National University policy impact director, and HECS creator, Bruce Chapman told Fairfax “fees will go up and they will go up quite significantly”.

He said a bachelor of medical science could rise from $24,000 to $120,000, in line with international students fees at the University of Sydney.

“I expect most universities will increase tuition fees to international student fee levels, which are currently about three times higher,” Professor Chapman said.

“The Group of Eight universities will do that pretty quickly.

“Past changes to HECS didn’t deter students from entering university, but now that there will be a real rate of interest on the debt we are in uncharted waters.”

Real interest of up to six per cent will also be applied to loans for the first time.

Professor Chapman said this was “unfair” and would hit students who drop out of university and work in low-paying jobs, and women who take time out to have children.

The government hopes the changes will force Australian universities to be more competitive and wants at least one local institution to break into the world’s top 20 and more in the top 100.

Graduates will have to start repaying the loans once they earn $50,638 from mid-2016, almost $700 less than now.

The fee deregulation has received a mixed response from Australian universities with traditional universities in favour of the changes, while technical and suburban universities have slammed the scheme.