Students at Dartington College of Arts in Totnes are demonstrating against plans to move the college to Cornwall.
The college principal admits the move is "unthinkable"
The college says it cannot afford to stay on the Dartington Estate.
A merger with Falmouth College of Arts would enable it to access more government funding, as Cornwall is a more deprived area.
The move has raised concerns in Totnes, home of the college since 1961 and among students who say the proposed move is a "scandal".
Students say the whole essence of the college comes from its relationship with the trust that runs the 850-acre estate.
The Dartington Estate was bought in 1925 by Leonard and Dorothy Elmhirst as a centre for an experiment in rural regeneration.
The college, which has 680 students, has been based at Dartington since 1961 and is recognised internationally as a premier institute for contemporary performing arts.
Dartington Principal Professor Andrew Brewerton said: "We are having to do the unthinkable, so of course I understand and share the strength of feeling that staff and students have.
"But those feelings are not enough to take us to a more sustainable place.
"Some of our students are the most energetic and creative that I have met in higher education and we want them to have a voice in this."
Student Union President Daniel Cook said: "Students love being here on the estate and we think what is happening is unbelievable.
"The course revolves around context and how the place you are in reflects what you are doing.
"We are inheriting a legacy from the Elmhirsts which is being put under jeopardy by this move."
He said lack of funding was an issue, but the college could remain on the estate.
"We don't think they have explored every avenue open to them," he said.
Consultants are now looking into the feasibility of the move.
The move, which has been discussed with the Higher Education Funding Council for England, would take place by 2009 at the earliest.