Changes are to be made to the way funding for third level education is divided up between colleges and disciplines.
The new measures will mean that more funding will be directed towards more expensive STEM courses - Science, Technology, Engineering and Mathematics.
They will also see financial penalties introduced to penalise institutions that breach governance rules.
They are based on recommendations made in a review of how funds are allocated, published by the Higher Education Authority.
The review suggests changes to the weighting of the existing funding allocation, so that it is more in line with national priorities and skill needs in the wider economy.
Therefore, STEM courses, which cost more to run, will get a greater share of existing funding.
The provision of part-time and flexible learning courses will be incentivised; the proportion of additional financing given on the basis of research performance will be doubled and there will be a greater focus placed on matching investment to student progression and completion rates.
This review deals with how existing funding is shared out, but it stresses that substantial additional investment is needed if quality is to be maintained.
The recommendations of the Review of the Allocation Model for Funding Higher Education Institutions have been accepted by the Cabinet.
While the HEA review makes broad recommendations, the exact weighting to be applied to new suggested allocation channels has yet to be decided.
In terms of institutions that fail to maintain governance standards the report states that "a penalty system for serious breaches of governance compliance, such as unsanctioned payments to staff; failure to provide timely and accurate submission of required information or data; false financial, statistical or governance reporting; and wilful breaches of the relevant codes of governance should be introduced".
However, details of any such system are still be worked out.
An implementation body will be established to develop concrete measures based on the recommendations.
While the current system already allocates more money to the STEM-related courses, such as medicine or dentistry, this review recommends that more of the income from fees that students pay should also be directed at these courses.
This means that while undergraduate students would still all pay the current student contribution of more than €3000, more of those aggregate funds would be directed towards STEM areas.
The review opens by addressing a wider underlying issue. In its foreword, it says the sector has a major funding challenge.
It says Ireland needs to urgently address this challenge with substantial additional investment. Later, the review states in bold font that "Ireland cannot continue to increase student numbers without a commensurate increase in investment".
Minister for Education Richard Bruton has reiterated his belief that new performance-based funding mechanisms and new targets for improved outcomes are vital for the sector.
Outlining the new targets, he said they would ensure that innovation, good governance, and excellent research were prioritised by Irish institutions.
