National MPs are lobbying Education Minister Christopher Pyne to redesign his proposed university scholarship scheme so regional universities get a better deal under fee deregulation.
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The Abbott government last week introduced legislation into Parliament to allow universities to set their own fees and create a new Commonwealth scholarship scheme.
Universities would be required to spend $1 of every $5 in increased fees on equity scholarships for disadvantaged students.
The scholarship money would remain with each university, meaning the institutions with the highest fees will be able to offer more scholarships or offer scholarships of a higher value.
The Regional Universities Network (RUN) is calling for a pooled funding arrangement so the money raised through increased fees is spread more evenly across the sector.
"City universities will be able to raise fees and drain the pool by buying students from regional areas, making our markets even smaller," RUN chair Peter Lee said. "Why don't we pool the money and make it available for students to study at any campus rather than tie it to an institution?"
At the Nationals' federal council meeting on the weekend, the party passed a resolution acknowledging fee deregulation but calling for a "greater weighting" for regional universities in the scholarship scheme.
Victorian Nationals MP Andrew Broad, whose electorate of Mallee includes campuses of La Trobe and Federation universities, said: "There is a strong argument for pooling some of the scholarship funds to ensure regional universities have access to it.
"There's no doubt some of our regional universities don't have the same capacity to raise scholarship funds. They have a higher share of lower socio-economic students."
Mr Broad said he had written a paper on the issue and presented it to Mr Pyne.
"The minister is considering it in the reform process," he said.
National MPs are also calling for regional universities to have better access to the Higher Education Participation Program which provides funding to universities based on their share of disadvantaged students.
A spokesman for Mr Pyne said: "The minister welcomes and considers input from all Coalition members and senators across the education portfolio.
"The government is strongly committed to vibrant and healthy regional universities and to students from regional Australia.
"The higher education reform package has a number of major benefits that will help strengthen and grow regional universities."
Regional universities are also calling for a compensation package, recognising that they operate in "thin markets" and have limited scope to increase fees.
