Victoria has the best and worst university completion rates in Australia, according to new Education Department data.

The figures also reveal that national completion rates have dropped to their lowest ever levels, with just 66 per cent of Australian students who started their degree in 2010 completing it within six years.

Federation University recorded the lowest completion rates for a mainstream university, with 36.4 per cent of students who started a course in 2010 finishing within six years.

But deputy vice-chancellor Professor Andy Smith said the university had under-reported its completion rates, and the figures were higher. He said the university had introduced a new program to boost retention rates and also provided mentoring, tutoring and counselling services.

"Regional university students face unique challenges that are not experienced by metropolitan based students, which impacts on the time it takes them to complete a tertiary degree. This must be taken into consideration by government in funding discussions," he said.

The University of Melbourne had the highest completion rate in Australia, with 87.7 per cent of students finishing their course within six years. 

This stark difference in outcome is explained by the vastly different students that these institutions enrol.

While the University of Melbourne enrols many advantaged students with high ATARs , Federation University enrols more disadvantaged, rural students with lower ATARs.

The figures show that Indigenous, regional and poorer students and those with ATARs below 50 are significantly less likely to complete their undergraduate studies.

Federal Education Minister Simon Birmingham used the data to criticise universities over their performance.

He spruiked his controversial plan to link university funding to performance targets – which is stalled in the Senate – saying it would provide more accountability.

"It's clear some of our universities need to take a close look at their efforts and do more to support the students they enrol with significant taxpayer subsidies," he said.

Separate data, released in the Graduate Outcomes Survey on Wednesday, highlights a decline in employment outcomes for Australian students who graduated in 2014.

Just 67.5 per cent of these graduates found full-time work within four months. This compares to 83.6 per cent of 2007 graduates.

However, most Victorian universities have bucked the national trend and their completion rates have generally improved over the past five years. 

Universities Australia chief executive Belinda Robinson said the government was trying to "dress up" a minor decrease in six-year completion rates as an argument for performance funding. 

She said the percentage of students completing their degrees within nine years remained stable.

She said there were also more mature and part-time students, who took longer to complete their degrees while juggling jobs, parenting and caring responsibilities.

Completion rates were highest for dentistry, medicine, rehabilitation and pharmacy courses. Those with the lowest completion rates were social work, information technology, tourism and agriculture.

A Fairfax analysis of university preferences data for students graduating this year has shown that Monash is the most sought after destination for the current cohort of year 12 students.

Almost 15,000 students have put an undergraduate course at Monash University as their first preference, more than the 11,250 who put Melbourne University as their top choice.

Federation University had the fewest first preference applications, with 743 people applying for a course there as their first choice.

The most sought after courses for school leavers are arts at Melbourne University (which 2470 people put as their first preference), medicine at Monash University (2113) and science at Melbourne University (2110).