A bill to deregulate university fees, raise interest rates on student debt and cut per-student funding has passed the lower house and is set to be debated in the Senate in October.

But the Regional Universities Network (RUN) is arguing smaller institutions don’t have the capacity of metropolitan universities to raise their fees by enough to cover the proposed government funding cuts.

RUN has proposed, among other things, a compensation scheme to assist with the adjustment and guarantee its members viability into the future.

In recent weeks education minister Christopher Pyne has come under increasing pressure from his Nationals colleagues, and a growing number of senators’ to ease the pressure of the changes.

On Monday, Ian Young, the chairman of the Group of Eight – the biggest capital city universities in the nation – added his voice to the debate, saying he and his colleagues recognised regional universities faced problems in raising revenue and delivering services and they were happy to forgo some funding to help them.

RUN chairman Peter Lee said while the student fee changes would help universities, extra support was needed for regional areas as they adjusted to the new system. 

“Targeted support for regional universities will help a diverse and competitive market to develop, and support these institutions to offer attractive options to students,” he said.

UNE vice-chancellor Professor Annabelle Duncan joined her RUN colleagues in Canberra last week to lobby MPs over the need for a fairer deal.

Labor frontbencher Kim Carr said the renewed lobbying effort was an “admission of the inequality” at the heart of the plan.

“Now that his strongest supporters have recognised that regional universities would be seriously disadvantaged by letting it rip on deregulation, Mr Pyne needs to admit it is time to go back to the drawing board,” Senator Carr said.

Mr Pyne said he was open to negotiations with Labor or the crossbench to pass the legislation.

“I will consider any proposal that is put to me ... but fundamentally the universities are united in supporting and believing these reforms should be passed and I agree with them,” he said.