Around 1,100 student places are set to be axed in Northern Ireland's two universities next year due to budget cuts.
Queen's University in Belfast and the multi-campus University of Ulster (UU) have outlined the consequences of the draft budget agreed at Stormont last week.
Under the spending plans, the Department of Employment and Learning, which funds the region's universities, is in line for an 11% cut next year - around £82 million.
In a joint statement, the vice-chancellors of Queen's and UU, Professor Patrick Johnston and Professor Richard Barnett, said Northern Ireland risked losing a significant proportion of its talent pool.
"One of Northern Ireland's greatest natural resources is our skilled, talented people," they said.
"People who are the lifeblood of local and international businesses, the research base and, ultimately, our economy.
"Higher education contributes £1.5 billion annually to the local economy, and is a key economic driver providing 8,000 high-quality graduates each year who are sought after by investors and indigenous businesses.
"The budget agreed by the Executive has imposed one of the biggest cuts on the Department for Employment and Learning and, in consequence, the budget to higher education could potentially be cut by at least 10.8%.
"The effects of this cut will be immediate: next September Queen's and Ulster University will accept up to 1,100 fewer students.
"Most of them are still likely to go to university, but they will be forced to leave for England or Scotland where they will pay tuition fees of £9,000.
"Past experience suggests that the majority of our young people who are forced to leave will never return. And the irony is that the Northern Ireland Executive will still have to cover a significant part of the cost of educating these students. In effect, the Executive will be encouraging local talent to leave Northern Ireland whilst subsidising universities in England and Scotland.
"The strategic implications for Northern Ireland are worrying.
"Over the past 12 months, Invest NI has attracted 11,000 new jobs, a significant proportion of which are quality jobs paying well above the NI private sector median.
Everyone who is involved in selling Northern Ireland abroad, and trying to attract inward investment, knows that one of our biggest selling points lies in the quality of our universities and the steady supply of high quality graduates. Reducing the number of graduates will affect the skills base and ultimately have a devastating impact on this region's investment proposition."
The university chiefs said their budgets had already been cut by 18% in the last four years.
"If Queen's and Ulster were located in England, they would have an additional £45 million per year to spend on students and services," they claimed.
"Further cuts just cannot be absorbed. They will have a significant and long-term impact."
Student representative body in Northern Ireland NUS-USI said the proposed cuts could be disastrous.
NUS-USI president Rebecca Hall called on the Executive to overturn the spending reductions for the Department for Employment and Learning.
"I am shocked and appalled that this cut has been proposed for the Department for Employment and Learning," she said.
"The Executive must overturn this proposed cut as it could have a disastrous impact upon students and the economy.
"Students must not be targeted within this budget. Students are Northern Ireland's future leaders, and the proposed budget could have massive ramifications for them.
"It would be horrific if the cut proposed leads to a decrease in the number of student places at universities and colleges in Northern Ireland. A reduction in student places could have significant ramifications for people's study options and could also have a disastrous impact on students' financial situations.
"Tuition fees simply must not increase, as it would be totally unfair to load the burden of any budgetary problems onto students. Why should students, who are society's future, have to pay for today's financial problems?
"How can a massive cut be proposed for DEL, which plays such a significant role in helping deliver the skills and qualifications necessary to help deliver jobs and investment? DEL plays a key role in growing the economy along with Department of Enterprise Trade and Investment, so how can Government be proposing extra resources for DETI, yet be proposing massive cuts for DEL?
"If the Government sees growing our economy as a key objective, then it simply cannot cut DEL's budget.
"Government needs to invest in Northern Ireland's future, and that means investing in students and education institutions.
"To deliver any cut to the DEL budget could have a disastrous impact upon students, staff at institutions, student services, students' unions and the economy. Government simply must overturn this proposed cut to the DEL budget."