At least a third, and possibly half, of young people leaving Northern Ireland to study on the mainland do so reluctantly, claims Ulster University.
Students are being forced to leave because of an increasing demand for places in the province, according to surveys which included interviews with parents and sixth-form pupils.
The university estimates a shortfall of 15,500 places in Northern Ireland compared to those available in Scotland.
Students have been "squeezed" because both Queen's University Belfast and Ulster increased required entry grades in the face of increasing demand, including from the Irish Republic, just as the restrictions on expansion began to bite.
The reports estimate that the squeeze could amount to a Pounds 38 million loss to the Ulster economy.
Bob Osborne, of Ulster's school of public policy, economics and law, who carried out the research, said more than 40 per cent of students from Northern Ireland went to universities in Britain.
"Those who leave reluctantly, and there are many who do, are the casualties of both universities here being forced to increase their entry grades in the face of increasing demand and because government has halted the expansion of places."
Peter Roebuck, Ulster's pro vice chancellor for academic affairs, said: "There is very, very significant underprovision, and a very strong case for relaxing the maximum aggregate numbers cap.
"Both the universities and the colleges here are feeling very frustrated because we cannot meet the needs of the community which we exist to serve."
Many school principals feel that local pupils are at a disadvantage when seeking a university place.