The latest business plan for the Northern Alberta Institute of Technology proposes a 40 per cent increase in tuition over the next three years, if the province allows increases beyond the 1.5 per cent cap that's tied to inflation.

The move is aimed at dealing with a budget shortfall of $2.3 million.

NAIT officials are considering huge tuition hikes as part of the institution's budget proposals. (CBC)NAIT has the lowest post-secondary tuition in the province, with an average of $3,800 a year. By contrast, the average tuition at the Southern Alberta Institute of Technology is $5,500.

If the proposal goes ahead, tuitions at NAIT would rise to more than $5,400.

"That's huge. I mean, some people who are on a really tight budget, I don't know where they're going to come up with that money," said Fernando Lopez, a student at NAIT.

Goeff Tate, president of NAIT's student association, says students and parents will fight the proposed tuition hikes. (CBC)The president of the students' association at NAIT said the proposal is an example of NAIT and the province offloading costs onto students.

"It's our job as student leaders to make sure that that doesn't go through," said Geoff Tate.

"If it does, that's when I think a lot of the students and a lot of the parents of these students are going to be very upset."

The proposal has not come across his desk, said Doug Horner, minister of advanced education and technology.

"Forty per cent across the board is not going to happen," he said. But he added there is room for post-secondary institutions to increase their tuition base.

"What we've talked about is, where you have a brand new program, as an example, that you're just bringing in, where do you establish the base for that brand new program as far as tuition goes?"

"And at the same time, if there's a tuition that was put in place back in 2006, and then we put the cap on, was it the appropriate base?"

That leaves the door open to more expensive education, said Rachel Notley, MLA for Edmonton, and she believes it would be a mistake.

"Everybody knows that one of the most effective ways to get yourself out of the recession is to invest in advanced education," said Notley.

"[It] helps diversify the economy, gets people back to work, all that kind of stuff. By raising tuition fees, it doesn't matter if it's for professionals or for first-year students, you're limiting access to post secondary, and that's bad governance, bad decision-making."

Any tuition increase would have to be approved by school officials in the spring before NAIT approaches the province for permission.