Scottish councils have warned that they may abandon the country's exams agency after being told that they face a £5m increase in their bills.
The SQA is responsible for setting and administering exams
The Scottish Qualifications Authority (SQA) plans to increase entry charges by 35% over the next two years.
The Convention for Scottish Local Authorities (Cosla) has threatened to stop sending exam papers to the agency and find an alternative marker.
The SQA said the rises were needed to reduce dependence on government grants.
The authority is responsible for setting and administering national exams and qualifications.
It was established with the aim of being self-financing, but said that a "considerable deficit" had built up between its income and its costs.
The problems stem from the 2000 exams crisis, which forced the SQA to introduce improvements in its systems.
The authority said charges were not increased in line with the cost of delivering the service.
In the current year the SQA needed a grant from the Scottish Executive of more than £18m.
The authority said it would be increasing charges for national qualifications and Scottish Vocational Qualifications by 20% in the financial year 2004-05, and by 15% the following year.
The current cost for a Higher exam is £23.75, which is expected to rise to £32.75 in the next two years.
Scotland's councils currently pay about £14m each year to the SQA to put pupils through their exams.
A spokesman for Cosla, estimated that the proposed price increases would cost local authorities about £5m.
Education spokesman, the Reverend Ewan Aitken, said: "Councils will not be held to ransom - and will certainly not be used as a tool to bale out a quango."
He said the SQA was trying to pass on the withdrawal of government funding in the form of "massive charge increases".
Cosla said it would now be seeking another provider for the service - even if it had to use one from south of the border.
Rev Aitken said councils were not looking to switch over to the English exams system.
"We have a distinctive Scottish system we are proud of and which delivers high quality," he said.
"But one of the key partners in that process has come in with a price rise that is untenable, and we want to explore all options."
The SQA said the increase in charges would go some way towards reducing its dependence on government funding.
Chief executive Anton Colella said: "When you compare SQA with elsewhere in the UK, our future
charges are much lower and therefore represent good value for money.
"In addition, we are working hard to improve our service delivery to schools, colleges and other providers of our qualifications."
Scottish National Party education spokeswoman Fiona Hyslop said councils could ill afford the increased charges.
"Pupils must not be pawns in a financial haggling row between different levels of government and a government agency," she said.
Tory education spokesman James Douglas-Hamilton said: "With £1bn of education spending never reaching the chalk face, it should not be beyond the
ability of the minister to sort this mess out.
"Our children deserve nothing less."