"Course choices closely reflect student interests. You're not going to do something that will bore you for three years and bore you for another 40 simply because the course is cheaper,"he said.

Mr Tehan said the price signal would encourage students to consider diversifying their studies with employment outcomes in mind.

"We think that the price incentives and the price changes that we have made,that students will pay attention to them,"he said.

The reallocation of funding under the package will fund an extra 12,000 university places next year,39,000 by 2023 and 100,000 by the end of the decade in response to surging demand for tertiary education.

The government will slash its subsidies for a range of courses and redirect funding to initiatives aimed at boosting attainment for regional,low-income and Indigenous students and strengthening collaboration between universities and business.

Labor education spokeswoman Tanya Plibersek said students should be trusted to make decisions about the employment potential of their studies.

"We're very pleased,of course,to see that prices will come down for some courses like nursing and allied health and teaching and so on. It's a good thing. The problem is that prices will go up,and they'll go up by a lot,in some other areas,"she said.

The fee changes will commence from 2021,subject to the legislation passing Parliament. Current students will not face a fee hike as the increases will be grandfathered. Fee reductions will apply immediately and benefit existing students.

National Union of Students president Molly Willmott said:"Future students do not deserve to bear the brunt of this government's ideological assault against higher-education."

Monash University vice-chancellor Margaret Gardner said"we can't assume that[the fee hikes] won't change behaviour"and warned low-income students would be more sensitive to the debt burden.

University of Sydney acting vice-chancellor Stephen Garton said he was"concerned about the shift in the funding burden from the government to the student,especially in the humanities and the social sciences and the cooling impact this could have on demand for these subjects".

Ernst&Young managing partner and education lead Catherine Friday said:"As public education delivers both public and private good,there is a strong nudge here towards maximising both,and discouraging ongoing high enrolments in courses like law,where demand for lawyers isn't growing at anywhere near the pace of the numbers of new law graduates every year."