Northern Ireland students who attend university here will pay the lowest tuition fees in the UK.
Fees will be around £3,375 - almost two-thirds less than the £9,000 maximum being charged by some universities in England, Wales and Scotland.
It also means that graduates leaving Queen's and the University of Ulster will be saddled with 60% less debt.
After widespread criticism for its inaction, the Executive last night confirmed fees will be frozen, a move that has been welcomed by the universities and students.
However, the popular decision has come at a substantial cost to the Department of Employment (DEL), which will have to contribute around £20m of the £40m shortfall by 2014/15.
Employment and Learning Minister Stephen Farry had already spelled out that such a move could mean cuts to employment and training services.
He had hinted that casualties could include the Education Maintenance Allowance, the further education sector and a reduction in services and training opportunities for young people and the unemployed.
But funding to universities will be ring-fenced, meaning they will not have to make any additional savings beyond the current £28m.
Commenting on the impact on DEL's budget, Mr Farry said: "Those details will be unveiled in detail on Monday but it is fair to say that this is a partnership between my department and the Executive as a whole and reflecting the need for my department to show leadership, we are in effect taking around 50% of the overall cost burden.
"However, that will be found from efficiencies in my department and I have no plans to take any further savings from the universities."
The other Stormont departments, with the exception of Health, Education and Justice, will make up the remaining £20m.
Speaking at Stormont Castle last night, First Minister Peter Robinson explained: "That substantive business required ministers to take a bit of pain because there were difficult decisions that we had to take, but we believe it is in the best interests of our education system that we do something for student fees that isn't being done everywhere else in the UK.
"We recognised that the Department of Education had a very difficult settlement and they have had to work very hard to be able to move forward.
"We had already excluded Health and the Department of Justice.
"It means that the other departments, and in particular DEL, had to carry the weight."
The Employment and Learning Minister said he was "grateful" to his Executive colleagues for working with him to collectively address the issue.
"The Executive's decision clearly demonstrates the recognition of the importance of higher education for our economy," he added.
Mr Farry will reveal in more detail his plans for funding higher education, tuition fees and student finance arrangements in the Assembly on Monday.
Issues that remain outstanding include what level of fees students from England, Scotland and Wales will be charged to attend university in Northern Ireland and if the 'maximum student numbers cap' will be relaxed to provide 2,000 additional university places here.
Mr Robinson said: "Northern Ireland has some of the best educated graduates in Europe.
"This decision today will ensure that this remains the case for the foreseeable future."
Deputy First Minister Martin McGuinness said: "A third level education should be accessible for all and in maintaining fees at current levels our children will continue to have access to high quality education.
"Today's decision will be widely welcomed by students and their families."
He added: "Departments have had to make sacrifices to do that but our promises to students, their parents and to society remains true. Certainly, over the course of this Assembly, there will be no increase in tuition fees."