Welsh sixth-formers could be discouraged from choosing the best education because their choice of university is now likely to be based on cost rather than merit. Many teachers believe that students who stay in Wales to avoid the pound;3,000 top-up fee due in England in 2006 could also miss out on what university life is all about.

“Our students can match anyone, anywhere, academically but self-belief and self-esteem is often a challenge, and we find that those who go away return with a greater air of confidence than those who stay close to home,” said Steve Bowden, headteacher at Porth county community school in Rhondda.

Welsh students will only have to pay pound;1,200 a year in fees if they go to a Welsh university, instead of up to pound;3,000 to go to England - thanks to a deal brokered in the Welsh Assembly last week. The Assembly government will pick up the tab for the remaining pound;1,800 a year if students decide to stay in Wales. The changes are expected to come into effect from autumn 2007.

Many believe it is an excellent opportunity to encourage those from poorer backgrounds to go to university, as well as a chance to keep good graduates in Wales.

Rebecca Jupp, an A-level student at Bryn Hafren comprehensive in Barry, says the deal for Welsh students is a good one.

“I think it’s going to encourage more people to go to university and get the brightest people to stay in Wales, because at the moment a lot of them are going away to study in England and end up staying there,” she said.

The deal is being hailed as a victory for students in Wales but there is growing concern about a deepening Wales-England divide. English, Scottish and Northern Irish students studying in Wales will have to pay the full amount.

Mair Ebenezer, head of the sixth form at Bryn Hafren, said: “Not having to pay top-up fees is going to encourage a lot more students to stay here, but a little bit of me thinks that we could be stopping them from engaging with the wider world.

“I am fearful that we will separate ourselves even more from England, making us more parochial than we are already, and that could be a bad move for our image at Oxbridge and other top English universities.”

Melissa Andrews, a Year 12 student at Porth county community school, said fees would be a major factor in deciding where to study.

She said: “I’m interested in doing dietetics but the best course for that may be in England. I’d like to think I would pay the extra money for something I wanted to do but the debt is worrying.”

Gruff Parsons, a pupil at Ysgol Gyfun Cwm Rhymney, in Blackwood, was disappointed when he was turned down to study medicine at Cardiff despite being predicted excellent grades. He now wants to study physiotherapy at King’s College, London, which would have been far more expensive had the NHS not stepped in with funding.

“I wouldn’t go if I had to pay the increase in fees,” he said. “I would have had to make a choice based purely on the cost, and that simply isn’t right.”