The National Tertiary Education Union is "appalled" at the decision by the University of Divinity to discontinue its School of Indigenous Studies.

The Melbourne-based university that offers courses in theology, philosophy and spirituality, announced late last week it was going to disestablish the School of Indigenous Studies, effective immediately.

At this stage, it's not known what will happen to the 10 First Nations students currently enrolled in the course.

On Tuesday morning the National Tertiary Education Union (NTEU) condemned the university's plan to scrap the course, saying it was greatly concerned that current and future Aboriginal and Torres Strait Islander students will be disadvantaged as a result.

"With no specific culturally safe or appropriate support services like that seen for other Aboriginal and Torres Strait Islander students studying at public and private universities across Australia," it said in a statement.

"NTEU is also concerned for the future of Indigenous theologies and the delivery of the University of Divinity strategic goal for this priority."

The NTEU said the University states clearly in its student support policy that the School of Indigenous Studies is responsible for: support for Aboriginal and Torres Strait Islander students, and students from world Indigenous cultures; and ensuring all parts of the University attend to providing a culturally safe environment for Indigenous students.

NTEU Aboriginal and Torres Strait Islander Policy Committee chair, Sharlene Leroy-Dyer expressed deep disappointment regarding the announcement by the university.

"The announcement made today is profoundly disappointing for the School of Indigenous Studies, Aboriginal and Torres Strait Islander staff, students and the University of Divinity as a whole," she said.

"The recent Australian Universities Accord final report stipulated that Aboriginal and Torres Strait Islander students are one of the most under-represented groups across the Australian higher education sector, and this announcement by the University of Divinity will undermine the years of work undertaken by the Reverend Gary Deverall and others, to build the profile of the University of Divinity amongst the Aboriginal and Torres Strait Islander communities."

The work of the School of Indigenous Studies is dependent upon charitable giving via the university's tax-deductible Indigenous Theology fund.

Dr Leroy-Dyer further said the School of Indigenous Studies should've never been solely reliant upon charity.

She said it indicated a lack of commitment by the university towards their Aboriginal and Torres Strait Islander students and staff by not properly funding the work of the school and ensuring appropriate student support.

"Overall, this is a backward step for the University of Divinity and highlights the need to ensure greater support for both Aboriginal and Torres Strait Islander staff and students at smaller and private higher education providers," she said.

University of Divinity vice-chancellor James McLaren said the university council decided to cease the course because of budgetary restraints.

"The council decided that model was not sustainable and there was no evidence to indicate the level of revenue required was going to be achieved in the calendar year," he told the National Indigenous Times.

"It was a long way short of meeting that revenue. We need a more sustainable model that can articulate that strategic commitment".

Professor McLaren said the students from the School of Indigenous Studies would be enrolled back into one of the colleges.