THE Scottish Government's policy of free tuition for university students has come under intense pressure from principals who said the sector was now "at tipping point".

Universities Scotland said cuts had made current funding levels "unsustainable" with the future quality of teaching and research at risk.

The body also said free tuition - which involves a cap on publicly-funded places - was making it harder for young Scots to access higher education compared to pupils in England - where annual fees of more than £9,000 are charged, but no cap exists.

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Alastair Sim, director of Universities Scotland, suggested potential options for institutions included course cuts and even compulsory redundancies with further uncertainty caused by Brexit and the Westminster clampdown on visas for lucrative international students.

The bleak picture emerged just weeks before the latest government spending review at a meeting of the Scottish Parliament's public audit committee, which is scrutinising a recent report by Audit Scotland on the financial health of the sector.

The report found universities received only 94 per cent of the cost of teaching students in 2014/15 while research is under-funded at 86 per cent of what it costs to deliver.

Overall, Audit Scotland said there had been a six per cent real terms cut to funding between 2010/11 and 2014/15 and warned of "underlying risks" to university finances.

Universities Scotland said that, since then, funding for higher education has been cut by another 6 per cent and five out of 18 institutions reported a deficit in 2014/15.

Mr Sim told the committee: "How you fund universities is a political choice and we recognise there is a broad parliamentary consensus in favour of free full-time undergraduate education, but if you are going to do that well then it does come at a price and we are seeing the indicators of stress at the moment."

Mr Sim said qualified Scots were finding it harder to get into university because demand had grown by 23 per cent whereas the number of offers made has increased by just nine per cent.

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While he accepted universities could lose some of Scotland's best pupils because of the squeeze, he added: "What worries me more is that there are students from all sorts of backgrounds who have the ability to come to university and succeed who are finding it more difficult in Scotland than in other parts of the UK to get into university because we have got a capped system here.

"We want to offer opportunity to as many people for whom it is the right option, but, unlike in England, we are operating in a capped system where we are limited in our capacity to do that.

"Add to this the financial risk and uncertainty caused by Brexit and the threat of further restrictions on universities’ ability to recruit international students and universities find themselves face-to-face with a sustainability challenge that is reaching the point where they risk not being able to operate today without damaging the ability to do so tomorrow."

Liz Smith, education spokeswoman for the Scottish Conservative Party, called for a fundamental review of higher education funding.

She said: "The pressures on it are now intense financially, but also pressurised by specific aspects of Scottish Government policy. What I am asking is whether... there has to be a major review of what higher education funding should be for the long term."

Iain Gray, Scottish Labour's education spokesman, added: "Alastair Sim's evidence makes clear the SNP are systematically underfunding our universities and this may lead to job losses."

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However, Paul Johnston, the Scottish Government's director general of learning and justice, said universities had been successful in supplementing the public money they receive with money from a wide range of other sources.

Earlier this week, Professor Sally Mapstone, the new principal of St Andrews University, warned the institution would have to look at "all credible funding options" because of the financial squeeze, but it is understood a reported move to privatisation is not being considered.