Borders College and Heriot-Watt University are to build a combined pound;25 million campus in Galashiels. Both parties are adamant that merger is not on the cards, although increased articulation allowing students to progress from FE to HE courses is.
Leaders of the two institutions made it clear this was their preferred option but it is one of five being submitted to the Scottish Further Education Funding Council which will make a final decision.
The plan has provoked controversy in the intensely territorial Borders area where campaigners in Hawick criticised what they see as scaling down FE in the town.
Only IT and evening class provision would remain but, in a parallel move, the college-university option will involve a new pound;2 million building in Hawick - dismissed by Jock Houston, veteran Educational Institute of Scotland leader and local activist on this issue, as "a sop".
Bob Murray, principal of Borders College, acknowledged that the plans may disappoint some but said: "We believe they provide the greatest benefits to the Borders as a whole and will ensure a sustainable future for further and higher education in the region."
The proposals do not at this stage affect the former Scottish College of Textiles, now part of Heriot-Watt University, which is also based in Galashiels.
In another link across the sectors, Stow College and Strathclyde University have announced an agreement which will allow students to move on to HE if they complete their corresponding college course.
The intention is that this should eventually cover all courses, enabling some students to go straight into the third year of a university degree course after two years at the college. This is already a partial feature of such agreements but is usually confined to a limited number of subjects.
Ministers have made it clear they want to see an extension of "two-plus-two" arrangements between FE and HE, as part of their agenda of widening access.
Alex McLean, vice-principal at Stow College, said that collaboration would begin in the arts, music, technology, engineering, computing science and business.
One significant move could be involvement by Stow in teacher training, both on initial programmes and continuing professional development.
The college has built up expertise in this area through offering professional development awards which provide teaching qualifications for FE lecturers.