Previously, foreign students from countries outside Europe studied for free in Sweden, but starting in the autumn, they must pay a minimum of 100,000 kronor ($15,625) in fees every year, according to newspaper Dagens Nyheters (DN).
The number of applications from outside the EU, Nordic countries and Switzerland fell from 132,000 last year to 31,400 this year, of which only 5,662 of them have paid the registration fee of 900 kronor, according to the Swedish Agency for Higher Education Services (Verket för högskoleservice, VHS).
Of the 132,000 non-European students who applied last year, about 20,000 were admitted to master's and international courses.
Sweden introduced application fees because the administration of hundreds of thousands of applicants cost universities and government agencies both time and money since many applicants did not fully complete the applications, according to DN.
"We wanted to first reach those who are seriously interested in studying in Sweden," Tuula Kuosmanen, section head at VHS, told DN on Thursday.
For universities, the reduction represents a major setback in their finances and many may be forced to curtail their course offerings, according to DN.
Lund University has the most applicants and slightly more than 2,100 non-European applicants have already paid the application fee, the newspaper wrote.
However, university vice president Eva Åkesson stressed that the universities will not find out how many candidates will actually accept their places until after June 15th, the report said.
Fees at Lund will cost 90,000 to 230,000 kronor per academic year.
"Already, the unnecessarily high registration fee may have deterred many gifted students. In other countries, it costs between 300 to 500 kronor," Åkesson told DN.
Lund has started its own scholarship fund and has received a couple of million kronor from external funding. Along with the 2.3 million kronor the university has received from the government, it estimates that it can provide scholarships to 40 to 60 students this coming school year, DN reported.
It is unclear whether applicants who have paid the application fee will receive residence permits and whether they have the necessary financial means to provide for themselves in Sweden. Many are likely dependent on grants for paying the high tuition fees.
"We hope to have 400 students start in the autumn fall in Lund, we will have to see if it is a high and ambitious goal," said Åkesson.
In addition to the 40 to 80 scholarships, the largest universities expect to distribute about 500 scholarships as allocated by the Swedish Institute, the report said.
Åkesson believes there is a need for a more well developed grant system so Sweden does not lose more talented students, according to DN.