Regional universities are concerned they will bear the brunt of the university funding freeze.

The Federal Government is imposing a cap on Commonwealth-supported university places for two years, which will see funding effectively frozen at 2017 levels.

From 2020, growth in places will be linked to population growth.

With university attainment rates in regional areas about half those in the city, advocates say country areas have a long way to catch up.

Universities Australia chair Margaret Gardner says the Federal Government must not to “slam the door of opportunity shut” on regional Australians.

“Young Australians and older Australians need the opportunity to respond to the changing world that's before them,” Professor Gardner told the ABC.

“That's requiring more and more the type of skills and capabilities that come from a university education.”

Federal Education Minister Simon Birmingham says the funding freeze will not lead to regional inequality.

He argues that regional universities should prioritise funding for student places ahead of their administration and marketing costs.

“Universities have enjoyed a period of time where they effectively got to write their own cheques. However, the Government has to live within a budget, Australian universities have to live within a budget, too,” Senator Birmingham told reporters.

“Australia's universities have enjoyed rivers of gold in terms of increases in funding over recent years.

“We know that their revenue has grown far faster than their costs in terms of teaching students. They ought to be investing some of that into supporting students rather than admin or marketing spending.”