Tuition fees could be forced upwards because of the government's approach to tackling immigration, it has been claimed.
The warning came after a thinktank outlined how ministerial plans to cut annual net migration from hundreds of thousands to tens of thousands could only be achieved by drastically cutting international student numbers.
Many higher education institutions rely on students from overseas coming to Britain for substantial proportions of their total fee income.
Around 70% of net immigration comes from the student route, according to Home Office research.
The Institute for Public Policy Research (IPPR) has struggled to find evidence backing that claim up, but has argued in a report out today that trying to drive down net immigration could have a devastating impact on the higher education sector.
"In the-run up to the announcement of severe cuts in international student numbers, the government has made much of abuse of the student visa system," IPPR associate director Sarah Mulley said.
"It is absolutely right to clamp down this - everybody agrees with that. But emphasising this issue now is something of a smokescreen, because the best evidence suggests that the vast majority of international students come here legitimately and most stay for only a short time."
A government study assessing what happened to the class of 2004 five years after graduating found 79% were no longer in the country. Six per cent were still studying, leaving just 15% who were unaccounted.
Higher education minister David Willetts recently included high-paying international students in a list of the factors governing universities' decision-making about whether to raise tuition fees to the maximum £9,000 rate.
Jo Attwooll, international policy adviser at higher education action group Universities UK, told politics.co.uk she feared the changes would have a negative effect on domestic students.
"There's the potential that if the proposals go through and there are a vastly reduced number of [international] students coming through, that will have a knock-on impact in home students, whether in the choice of courses or universities having to raise fees for home students," she said.
"It could happen. Universities would have to adapt to not having that income and therefore they'll have to find other ways of making up the shortfall."
Maths, engineering, science and technology courses which are popular with international students could be scrapped as a result.
One option being considered by ministers is raising the bar for English language capabilities.
That would deter the large numbers of international students who come to Britain to combine preparatory courses for undergraduate degrees, like foundation courses, with English language tuition, Ms Attwooll said.
"Potentially, the economic impact is not only at the individual institutional level, but also the regional and national level is likely to be quite substantial," she added.
Universities UK pointed to universities' compliance rate of 98%, demonstrating that tackling abuse of the student route into Britain would not have a major impact on overall net migration.
Sir Andrew Green of pressure group Migrationwatch said IPPR had "got the wrong end of the stick", however.
"The government are not cutting genuine students, they are clamping down on bogus ones - a quite different matter," he explained.
"Bogus students not only add to net migration, they undercut the pay of British workers while dodgy colleges damage the reputation of British education. These measures are long overdue."
Recent data suggested student immigration from outside the European Union had stabilised recently, standing at just over 270,000 in 2009.
International students are believed to provide a £10 billion boost for the UK economy through fees alone. The expanding global market for students coming from abroad could provide an extra 80,000 academic and support role jobs at Britain's universities in the next decade, Universities UK said.
Ministers are currently considering how to reform the existing student visa system. A consultation on the issue closed on January 31st.
Immigration minister Damian Green said the student visa route into Britain had to be reformed if the coalition was to meet its target of reducing net migration.
"People imagine that students come here for a few years to study at our universities and then go home - that is not always the case," he said in response to the IPPR report.
"We have uncovered many examples where individuals come to study courses below degree level as a cover for staying and working. In a sample of students studying at private institutions up to 25% of them could not be accounted for.
"Our proposals are aimed at both driving out this abuse and making the system more effective. We are working closely with the sector and will continue to welcome the brightest and the best."