Applications for university courses for 2012 are down almost 10 per cent compared to those for this time year, according to the Universities and Colleges Admissions Service (UCAS).
The number of applicants has fallen from 76,612 students at this stage for 2011 to 69,724 for 2012.
The cap on tuition fees will leap from £3,375 a year to £9,000 a year in 2012, under controversial plans outlined by the Coalition last November.
The teaching budget for higher education, excluding research funding, will be cut by £2.9billion, or 40 per cent, over the next four years, hence the need for additional income.
UCAS published the data following an October 15 deadline for applications to medicine, dentistry and veterinary courses at Oxford and Cambridge.
The admission service also included the number of students who have applied so far for other university courses, which have a January 15 application deadline.
The figures are a blow to the Coalition and suggest a looming meltdown in higher education as students shun degrees for fear of being burdened with debts as high as £50,000.
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They will also raise the prospect of vice chancellors increasingly relying on overseas students who pay the full cost of their courses, which can be as much as £26,000.
National Union of Students vice-president Toni Pearce said today: 'The indication is that the confusion caused by the Government's botched reforms is causing young people to, at the very least, hesitate before applying to university.
'Ministers must stop tinkering around the edges of their shambolic reforms, listen to students, teachers and universities, and completely overhaul their white paper before temporary chaos turns into permanent damage to our education system.'
Student loans and fees: the changes from 2012The new student finance system from September 2012 will lead to students leaving university with much larger debts, paying higher levels of interest and taking much longer to repay their loans.
Under the current system, a student would need to borrow £10,125 to cover the full fees on a three-year course. Repayments are 9% of salary above £15,000 and interest is charged for a year from September at the Retail Prices Index inflation figure recorded the previous March. Under the new system, a student would need to borrow £27,000 to cover the full fees on a three-year course. Repayments will be 9% of salary above £21,000 and interest will be charged at RPI for those earning less than £21,000, then step up between RPI and RPI plus 3% for those earning £21,000 to £41,000 and RPI plus 3% for those earning £41,000-plus. Under the old system students with a family household income of £50,000 or less could get a maintenance grant. Under the new system the cut-off point will be lowered to £42,600. Those with an income of £25,000 or less will get more assistance under the new system.Sally Hunt, general secretary for the University and College Union, which represents more than 120,000 academic staff in post-school education, said: 'The Government's fee policies have been a complete mess from day one.
'First, the Government promised that fees of more than £6,000 a year would be the exception rather than the rule, but budgeted for an average fee of £7,500.
'As everyone predicted, the average fee was far higher than that and, even more predictably, the number of students applying to university has dropped.
‘The real worry here is that, as youth unemployment approaches a million and further education colleges are hit with funding cuts, we risk consigning an entire generation to a scrapheap of inactivity.’
A survey of 26 universities opn Sunday found that more than half reported a fall in overall applications for next autumn.
The average drop is about ten per cent, however, the survey found some institutions are experiencing dramatic falls.
City University London, which has announced fees of £9,000-a-year, has seen applications plunge by 41.4 per cent, down from 1,492 this time last year to just 875.
Applications are down 35 per cent at Goldsmiths, University of London; 24 per cent at Brunel University, West London; and 16 per cent at Manchester. Exeter and Surrey have both seen falls of more than 7 per cent.
This year, the number of applications jumped to 694,535 as students rushed to beat the fee rise. And the number of accepted applicants rose from 476,755 in 2010 to 486,917. The average tuition fee for 2012 is £8,393 – up from the current £3,375.
A Government spokesman said it was too early to tell what the final numbers would be, adding: ‘It is important that no one is put off because they do not have information about how the new student finance system works.’