The Scottish universities that are traditionally most popular with English students have seen applications from the rest of the UK fall more sharply than others in Scotland.
Universities and Colleges Admissions Service statistics show a 14.9 per cent drop in English applications to Scotland since the beginning of the year.
But analysis by Times Higher Education shows that the two top-ranked institutions - the University of Edinburgh and the University of St Andrews - have suffered the biggest declines.
The statistics, provided by the universities, show that applications to Edinburgh from rest-of-UK students fell 35.6 per cent to 11,942 in the year to July.
At St Andrews, where students from England, Wales and Northern Ireland make up more than half the undergraduate body, applications from the rest of the UK were down by 18.7 per cent.
The drop comes in the final year of £1,820 fees for rest-of-UK students in Scotland. From 2012-13, they will be charged up to £9,000, although the Scottish education secretary Michael Russell has insisted that they will not be put off by higher fees because Scotland should still be a "slightly cheaper option" than England or Wales.
Scottish universities are expected to announce their fee levels at the end of September.
A spokeswoman for Universities Scotland said that the drop could be due to reluctance by British students to leave their local areas during a recession, uncertainty over how much Scottish universities will charge and a focus on English institutions in the year before the fee cap rises to £9,000.
She also suggested that the dip could be the result of a "feedback loop", where low success rates last year deterred students from applying to Scottish universities.
Edinburgh said it had been "more explicit" in its entrance demands this year, which, it said, had put off less qualified applicants. Scottish applicants to Edinburgh declined by 6.4 per cent.
The institution takes a third of all students who go to Scotland to study from the rest of the UK. Just four of Scotland's 15 universities take in 67 per cent of those students: Edinburgh, St Andrews and the universities of Glasgow and Aberdeen.
Applications to Glasgow have dropped by 10 per cent and to Aberdeen by 6.7 per cent.
Speaking to THE, Mr Russell said he expected a "small check" in the number of rest-of-UK students applying to Scotland when the fee cap rises to £9,000 in 2012-13.
But he maintained that this would be a passing phase and that application numbers "will return pretty quickly to the sort of average they've been at in the past 10 years".
He said that £6,375 a year was a "likely average" fee for Scottish universities.
"I really don't think there will be anything like the rush (to charge the maximum permissible) that they've had in England and Wales," he added.
"Universities want the money from those students. So they're not going to price themselves out of whatever market has developed."
david.matthews@tsleducation.com
Fees discrimination claim 'unlikely to succeed'
Doubts have been raised over whether a legal challenge to the Scottish tuition-fees regime will succeed.
Phil Shiner, head of Public Interest Lawyers, believes charging non-Scottish students higher fees could break the European Convention on Human Rights and the UK's Equality Act and said the system was "deeply discriminatory".
Currently, Scottish undergraduates do not pay fees to attend a university north of the border, while students from the rest of the UK pay between £1,820 and £2,895 a year.
From 2012-13, students from elsewhere in the UK will pay up to £9,000 a year while Scots and students from other European Union countries will continue to pay nothing.
Stephen Hocking, a partner in public law at legal firm Beachcroft, said Mr Shiner "could win but I think he will lose".
He said that the European Convention guarantees that "no person shall be denied the right to education" and outlaws discrimination on grounds of "sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status".
Mr Hocking said: "He (Mr Shiner) may not be right as the Scottish government's position is that it does not discriminate on a national basis, but on where you live."
He added that Mr Shiner might be able to prove that discrimination by domicile was discrimination by "other status", but noted that universities routinely discriminate on other grounds - for example, qualifications.
The question then was whether discrimination by domicile was a "legitimate aim" and was proportionate, he said.
He added that Mr Shiner had a similar case to prove if he used the Equality Act, and that both cases would stand or fall on the same grounds.
Jacqueline McGuigan, a solicitor at TMP Solicitors, said that discrimination, for example on the basis of age, could be legal if it contributed to "legitimate employment policy, labour market and vocational training objectives" or other "legitimate aims".
The Scottish government has introduced the regime to prevent a flood of "fee refugees" from England overwhelming Scottish universities when tuition fees rise south of the border.
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