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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