Education bosses say budget cuts left them no alternative but to end the funding of full university tuition fees.
Next month Tynwald will be asked to approve a universal 'flat fee' contribution of ?2,500 per year for each student studying off-Island.
A system of means-testing would be introduced for those whose parents earn more than ?80,000, on a rising scale.
High earners with incomes exceeding ?100,000 would be expected to fully fund students' tuition fees.
A Treasury-backed loan scheme is planned, with repayments due one year after graduation if the student earns more than ?21,000.
If approved the new scheme will begin from September 2014.
Director of Education Martin Barrow says the tight squeeze on budgets means urgent action's required:
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