Michael Russell denies university racism claims
He insisted that Scotland would end up "going bust" if it was forced to pay the costs of non-Scottish UK students while Scottish students could face being frozen out.
But other European students will continue to go free under EU rules which prevents member states being treated differently, prompting claims from English Tory MPs that it amounted to discrimination and threats to challenge it through equality legislation.
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Hide AdBut Mr Russell said yesterday: "This is to do where people live - there's nothing racial or ethnic in it at all."
He added: "We've been driven to this by a decision of the UK government to create a market in higher education south of the Border."
The Scottish Government will allow universities in Scotland to charge up to 9,000 to stop Scotland becoming a "cheap option" for English, Welsh and Irish students.