CANBERRA, Jan 17 - Universities Australia anticipates the $2 billion freeze will mean almost 10,000 student places effectively go unfunded this year.
It says that's a conservative estimate, that assumes no overall growth in student numbers.
The decision to keep funding at 2017 levels for two years was announced in the Turnbull Government's December budget update, just a fortnight before it came into effect.
"Many universities had already made detailed plans by that time on how many places they would offer in 2018," Universities Australia chief executive Belinda Robinson said.
The freeze means universities will not get extra money if they enrol more students than last year and they also won't see any indexation to help with rising costs.
The peak body says to break even, universities will have to cut commonwealth-funded places by 1.5 per cent - about 9500 spots.
But Robinson said universities were determined to honour their commitments to prospective students.
"Some will be forced to offer fewer places in some courses to avoid a budget black hole. Others will have to dig into critical maintenance funds or will lose the funding they need to run outreach into regional and remote Australia."
Regional institutions say it will hit health courses heavily, highlighting the example of Central Queensland University where nursing student fees would no longer cover the cost of their hospital training placements.
Southern Cross University's new $12 million allied health sciences faculty could be left empty if it can't afford to enrol students in any of the courses it planned to offer there.
Regional Universities Network chairman Greg Hill says such initiatives had been under development for years, often with co-investment from the government, but now risk being left high and dry.
Education Minister Simon Birmingham has highlighted record levels of per-student funding and suggested universities look to marketing budgets to find savings.
"Are universities really saying that they can't find a meagre 1.5 per cent of efficiencies across their $17 billion budgets?" he said.
"If so, then they should be embarrassed for putting administrative and marketing budgets before their students."
Experts say the funding freeze - made without needing parliamentary approval after the Senate stymied earlier plans to cut university budgets - amounts to ending the demand-driven policy.
Last week, ratings agency Moody's warned the government's action would force universities to rethink their growth plans.