Universities in Wales could fall behind those in the rest of the UK unless the way students are funded changes.
That is the warning from the head of the body holding the purse strings for Welsh colleges, the Higher Education Funding Council for Wales, Hefcw.
Students from Wales pay the first £3,500 of tuition fees but the Welsh government picks up the tab for the rest wherever they study in the UK.
The amount “leaving” Wales to English universities is about £90m this year.
Hefcw’s chief executive Dr David Blaney said it means less money is available to invest in Welsh colleges.
Since September 2012 the Welsh government has paid the majority of Welsh students’ tuition fees, wherever they choose to study, also cushioning them from increases in fees.
But universities in Wales say this means they are not on a level playing field with their English counterparts.
The original estimate for the amount of tuition fee grant money that would end up in the coffers of English universities this year was £77m.
But BBC Wales understands the actual figure will be closer to £90 million.
Dr Blaney said in England, English students have to get a loan, so the top universities there have £9,000 coming from each student and also funding from the funding council.
“In Wales, a lot of the funding council funding is now spent on the tuition fee grant and that means there’s less money available to invest in the Welsh sector than is the case in England,” he told BBC Wales in an exclusive interview.
A Welsh government spokesman said its funding protected Welsh students after the UK government decided to raise tuition fees in England.
“We have been very clear that our tuition fee policy is an investment in the young person and that the choice of institution and course should be driven by individual circumstances not by the cost of fees.
“Wales is a net importer of students, and income to the higher education sector in Wales continues to increase despite the current challenging financial climate.”
He added: “Latest statistics show that in 2015-16 £48m more funding will come into the Welsh system than will go out in tuition fee grant to institutions outside Wales.
“In addition to this the number of students attending Welsh HEI’s is increasing and the level of debt for Welsh students is considerably lower than their counterparts in England.”