The Northern Ireland Colleges' Consultative Forum claims there is an emphasis on policing which should not be necessary in view of the close links between DENI and the small number of colleges.
The reforms are intended to bring further education in Northern Ireland in line with colleges in England and Wales which were incorporated in 1993.But critics say the moves are far more heavy-handed and the cuts more draconian in Ulster.
"Such a heavy-handed approach could threaten the spirit of rapport and partnership which has existed and which needs to remain post incorporation," says the forum in its response to the draft orders.
"While it is recognised that the Department of Education needs to have ultimate power, in many instances there is still a strong feeling that these powers will smother the future development of further education.
"Are colleges really corporate bodies or an agency carrying out the responsibilities of the department? Will the department be a large bureaucratic organisation demanding colleges to operate within their framework?" it asks.
The lecturers' union NATFHE has also criticised the draft legislation. "We have repeatedly made the charge that the department is taking central control," said regional official Jimmy McKeown.
"We would like a funding council which would remove some of that central control and might have oversight over both further and higher education."
NATFHE says the statutory order should make it possible to create such a funding body in future, as Scottish legislatio n does, and that there should be a means of challenging decisions taken by the department.
The draft order - which the Government hopes to push through Parliament early in the new year in advance of incorporation on August 1 - gives DENI control over all aspects of college work. Any grants or loans may be subject to "such conditions as the department thinks appropriate " and the department can shape the content of development plans.
The Department of Education can change instruments and articles of government and vary, add to or remove the powers of colleges.
The forum submission says the department's right to impose any arrangements in the way they charge fees, assist students, provide meals and refreshments, supply goods and services, form companies and make investments "greatly curtails the powers given to governing bodies".
It claims that the power to require them to give the Department the proceeds from sales of surplus property is "particularly restrictive, especially to the development of strategic decisions and the use of such property for security against borrowing". DENI's right to appoint the chair and all other governors is also seen as "heavy handed".
NATFHE says the small number of governors - between 12 and 16 - will reduce community involvement and create practical difficulties in the work of sub-committees. It believes there should be less business representation and more from trade unions and staff, and that part-time as well as full-time students should be allowed to vote for a member.
The Ulster People's College has also criticised the absence of democratic representation on governing bodies and the lack of partnership between colleges and local communities. It argues that the inflexible regime being introduced "may impede the emergence of new, innovative forms of education to meet emerging needs".
"The draft order should be amended to give [the education department] a strategic planning role for the further education sector as a whole. Within this strategy, colleges should be given greater scope to determine their own futures, subject only to the requirements of public accountability," it says.
The UPC also claims the order may prohibit higher education work, such as its community development and community relations courses, accredited by the University of Ulster, and could bar it from receiving core funding from the department.