Federal Education Minister Christopher Pyne insists competition between universities will force student fees down under the Government’s shake-up of the sector.

In an email sent to staff on Friday, University of Melbourne vice-chancellor Glyn Davis said fees may have to rise by as much as 61 per cent in some courses as a result of funding cuts and deregulation announced in the federal budget.

He told staff that students would get “nothing new for this increased debt”.

I think competition will drive prices down and students will be the winner in terms of quality and price

But Mr Pyne told Insiders universities who hit students with excessive fees would be priced out of the market.

“If universities think they can get away with charging exorbitant fees I think you’ll find that they’ll face very intense competition,” he said.

“For example in Melbourne, if Melbourne University thinks they can charge ‘x amount’ for a university degree, Monash, Latrobe, [or] Deakin – others will compete with them on price, forcing prices down.”

Mr Pyne said it was too early to be speculating about specific fee changes.

“We have given ourselves 18 months to implement the new funding model for universities,” he said.

“I’m not going to respond to the different statements or claims being made by particular vice-chancellors because at the end of the day, I think competition will drive prices down and students will be the winner in terms of quality and price.”

However, Opposition Leader Bill Shorten says both the Education Minister and Prime Minister cannot assure students fees will not rise significantly as a result of budget changes.

“[They have] time and time and time again refused to guarantee that we won’t see the rise of $100,000 science degrees, that we won’t see university degrees doubling in cost. They can’t guarantee that prices won’t go up,” Mr Shorten said.

“The reason they can’t is because they know prices will go up for kids hoping to go to university in Australia.”

Melbourne vice-chancellor details possible fee hikes

Mr Davis said the Coalition’s budget measures “compound large cuts” introduced under the Labor Government in 2012 and 2013.

“This is the essential context for understanding the public argument about student fees. Much public funding will likely be removed from tertiary education,” he wrote in the letter to staff.

“Universities are invited to make up this gap through higher fees. Initial analysis shows the gap is momentous indeed – fees would need to rise by 45 per cent to make up lost funding in social science disciplines, by 54 per cent in science, and by 61 per cent in engineering. Students would get nothing new for this increased debt.”

Mr Davis said there were aspects of the Government’s proposal that he likes, and welcomed further consultation with the university sector.

“We might hope that core aspects of the package worth supporting – such as extension of the demand-driven system to sub-bachelor degrees, greater competition, and access by more young Australians to higher education – endure,” he writes.

“We should urge the Government to moderate the interest rate imposed on student debt and reconsider deep cuts caused by the change in funding clusters.

“It will be impossible to settle the contentious issue of future fees until Senate approval of the final package of reforms to higher education policy and financing.”