UNTIL the federal government lifts its university funding freeze, the University of New England says it's not feasible to build a campus in Tamworth that it would be unable to fill.
The educator insists its long-term goal is to build a campus in the city, but it has to work to the realities of the situation and, for now, is looking a specialised hub model.
UNE spokesman Bryn Griffiths said the university was "planning to the situation and taking a different approach".
"It wouldn't make economic sense to build a campus we can't fill up," Mr Griffiths said.
"We do see a tipping point where the Tamworth campus will be necessary. We won't start with that, but we are working towards it."
UNE is considering a number of hubs in specialised fields that complement Tamworth's industries.
"The disciplines we are interested in are music technology, food processing technology and medical technology," Mr Griffiths said.
"What we can do is work with local industries. There could be a devolved hub system, so something out near the airport for food processing, things happening at the hospital and stuff happening in conjunction with the creative arts precinct.
"Nothing is set in concrete yet; we're trying to stay alive like everyone else at the moment."
Two years ago, the federal government placed a cap on government-funded university places, which means the money the commonwealth pays to universities for students in bachelor courses remains at 2017 levels.
Mr Griffiths said the cap disproportionately affected regional universities.
"Regional unis struggle to get large numbers of international students, so for student income they rely heavily on domestic places," he said.
"We're lobbying from all angles with a number of different groups, but the government won't budge.
"It they don't release the caps, it's going to hurt everyone."
UNE expects to finish the next step in the business case by February or March.