Two-thirds of all further education and sixth-form colleges offer HND, HNC or degree courses to local people who cannot afford university places.
"In almost every case colleges had reduced intakes," reveals the survey by the Association for Colleges, published for its annual conference in Glasgow.
The axe fell after Chancellor Kenneth Clarke's 1993 Autumn Statement when funding to universities was cut. The aim was to engineer a switch of resources from arts and humanities to science and technology, while reducing overall spending. College principals are bracing themselves for more bad news in next week's Budget.
It soon emerged last year that a crucial miscalculation had been made. FE colleges offering such courses would be hit by the reduction in tuition fees paid by Government. Only weeks before, they were assured by the then Education Secretary John Patten that college degree courses were the answer for those without a university place.
The full extent of the crisis has only now emerged. The scale of cuts ranges from 20 per cent to 50 per cent. In many colleges, cash earmarked for new starters has been used to stop courses closing.
College principals in the survey were unequivocal in their condemnation of the cuts.
Colleges have also been losing up to Pounds 600,000 each through universities poaching students in mid-course in shortage areas such as science and engineering, another study shows. Principal of Stockport College, Dick Evans, carried out the second study. He said: "Some colleges have lost 10 or 20 per cent of higher education students, with universities poaching, often by phoning them at home. The damage is so severe that some are failing to hit their growth targets and have had their budgets clawed back."