The SNP-run authority is looking at more than 30 options to save pound;7.5 million and has suggested the wording of the Act may allow it to charge up to pound;15 a night or pound;60 a week for the hostel, which houses 43 pupils at Breadalbane Academy and costs pound;250,000 a year to run.
Bruce Crawford, the council's leader, said: "If you are looking after children at home, you bear a cost. So surely when they are staying away from home you should also pick up a share of the bill."
The Scottish Office refused to comment and said it was a matter for councils to interpret sections 50 to 52 of the Act which relate to local authorities providing hostel accommodation when pupils are unable to travel daily to school.
The Rev Sandy Gunn, school board chairman at Breadalbane and school chaplain, said parents were bitterly opposed. "When there is a principle that education is compulsory, then it should be free. Once you start eroding these principles, you are on a hiding to nothing," Mr Gunn said.
Most pupils came from the remote upper rural areas of Glen Lyon and Rannoch. "There are one or two families with more than one child and hostel charges could cost them pound;120 a week. They work on the land, kill a sheep, grow their tatties and get their accommodation. There is not much money changing hands. A take-home pay for the week could be pound;120," he says. Mr Gunn believes charges would not only affect education but would lead to the depopulation of the glens.
Bob McKay, the council's director of education, said there was no question of parents paying if no daily transport was available. But some parents had the choice of free transport or a hostel place.
"They can retain their entitlement to transport but if they want to use the hostel they should make a financial contribution," Mr McKay said.