An additional 2,000 university places could be made available in Northern Ireland - but only if the Executive agrees to fund the recurring shortfall in the Department of Employment and Learning's (DEL) budget, the Belfast Telegraph can reveal.
The news comes as the Executive is also accused of a lack of urgency over the September deadline for deciding the way forward on fees.
Minister for Employment and Learning, Stephen Farry, has advised his Executive colleagues to consider the £15m per annum option for more places alongside any decision on the level of tuition fees for 2012.
The University of Ulster has already asked the minister to increase capacity at its north-west campuses by 1,000 but was turned down because of DEL funding constraints.
Mr Farry's request to the Executive comes as record numbers of students lost out on a university place, amid the scramble ahead of next year's fees increase in Great Britain.
Currently, around 4,000 students (30%) from here opt to study at higher education institutions outside Northern Ireland and there are fears that number could increase, causing a severe brain-drain.
"Get it wrong and the outcome could be catastrophic, with a second class higher education system, exporting many more of our best students, possibly losing them forever - and damaging Northern Ireland's international reputation and future prospects in an increasingly competitive world," Mr Farry warned his counterparts.
According to an internal document, which the Belfast Telegraph has seen, "if the Executive agrees to make the necessary allocation to DEL to address the £40m shortfall" the minister has vowed to dig deeper into DEL's coffers to fund additional university places.
However, he has warned the Executive that the overall issue of funding Northern Ireland's universities needs to be addressed on a permanent basis, rather than 'hand to mouth' through quarterly monitoring rounds.
Meanwhile, DEL and the Executive have been accused of dragging their heels on university fees as the deadline for a decision on the way forward fast approaches.
The universities, the student loan company and Ucas all need a decision by the end of September to prepare for next year's student intake. DEL committee chairman Basil McCrea said now was the time for action, rather than words. His comments came as the Belfast Telegraph saw documents revealing four options on fees that Mr Farry will put before the Executive.
Mr McCrea said: "There is definitely a lack of urgency in addressing this issue. "There was meant to be a decision in the early summer but that hasn't happened. We are now way behind and people are getting very concerned."
Mr McCrea said time was running out fast: "These proposals will have to be put before my committee for accelerated passage and decisions have to made.
"Students doing courses like medicine are having to make decisions by October, so decisions must be made before then."
The Executive, which only saw the options paper before the Assembly summer recess in July, and is due to meet next week, has been asked to consider no less than seven proposals. They include: raising fees to £4,500; asking the higher education (HE) sector to absorb the costs, which would be £40m annually by 2014/15; DEL funding the shortfall out of its budget and securing the additional recurring resources from the Executive.
The paper also reveals that Mr Farry wants a relaxation of the MaSN (maximum student number) cap to facilitate up to an additional 2,000 university places.
He is also minded to wholly financially support students who opt to study in Britain where tuition fees will be as much as £9,000.
That will place significant further burdens on DEL's budget as it bears 30% of the cost of subsidising student loans.
However, Mr Farry would like to follow Scotland's lead in charging higher fee levels for students from England, Wales and Scotland who want to study in Northern Ireland. Such a move would require legislation and the support of the Executive. In reneging responsibility, the Employment and Learning Minister argued: "The future funding arrangements for higher education here are, therefore, not simply a matter for the Department for Employment and Learning but an issue of critical importance for the Executive as a whole."
DEL currently provides a block grant for teaching and research to the universities amounting to £202m. It would appear Mr Farry has cross-party support, as in an Assembly debate on June 27 politicians from all parties spoke of the need for the Executive to accept the collective responsibility to find the money. There is also no political consensus in favour of a rise in tuition fees.
Although Mr Farry has given the Executive several options to consider, it is clear that his preference is for increased fees or the Executive to shoulder the financial burden - as it did with the deferral of water charges.
He warned his colleagues: "To ask either the department or the higher education sector to absorb the shortfall would have very unpalatable consequences that would impact negatively on our HE institutions. It would also have very damaging consequences for the future economic development of Northern Ireland.
"The potential consequences for our higher education sector, our young people and economy are dire if we do not invest properly, whether through increased fees or further budget support."Story so far
From 2012, university fees in England will range from £6,000 to £9,000. English domiciled students will be able to borrow loans to the full value of tuition fees. In Wales, fees will range from £4,000 to £9,000. Welsh students will be able to borrow fee loans to the current value and the Welsh Assembly will cover the remaining balance. In Scotland, Scottish domiciled students will not have to pay tuition fees. The Scottish Government is planning to charge students from other parts of the UK up to £9,000 - a legal challenge has already been mounted. In the Republic, registration fees are €2,000 per year (£1,770). In Northern Ireland fees for the incoming academic year will be £3,375. No decision has yet been taken for 2012.
Increase fees to £4,500, which would allow the Department to address the £40m shortfall in its budget. However, it would still leave the province's higher education institutions less well-off than their counterparts in England and Wales, which will be able to raise more income through higher fees.
If fees are to increase above inflation such a move must be supported by the Executive and subsequently the Assembly. The necessary legislation would need to be passed by the Assembly next month to give the universities/colleges, Students Loan Company and other stakeholders time to make the changes for 2012/13.
Require the university sector to address the funding gap of £40m annually by 2014-15.
Asking the higher education institutions, already making savings of £28m, to fund a further £40m would mean reducing their annual block grant in real terms by 50%. That would threaten the viability of our universities and colleges and would lead to a 30% reduction in student capacity - forcing more Northern Ireland students to study in GB.
The result will be a smaller and second rate higher education system for Northern Ireland, with more of our students looking towards GB for their education, the costs of which will fall to the Northern Ireland Block.
The Department of Employment and Learning absorbs the shortfall. That would mean the complete abolition of the Educational Maintenance Allowance, a fortnightly payment of up to £60 for students who are aged 16, 17, 18 or 19. It is paid directly to young people from households with an income of £33,950 or less who stay on in education after they reach the end of their compulsory schooling. It would also result in a major reduction in the capacity of the further education sector and a reduction in services and training opportunities for young people and the unemployed.
Secure the additional resources from the Executive.
That would avoid an increase in fees and damaging cuts to the universities and other training and employment related programmes. This approach would be similar to the collective approach taken for the deferral of water charges when the costs were borne by the Northern Ireland block.
Within this option the Employment and Learning Minister has also asked for 2,000 additional university places to be made available in Northern Ireland, for our students who may want to study here rather than pay higher fees in GB.
And to consider providing scope for Northern Ireland's higher education institutions to charge GB students differentially, which would also require legislation.
There is also the issue of the extent to which students from here, who wish to study in other parts of the UK, are supported financially as a result of the disparity in fees across the UK.