The constituent college of Cork Institute of Technology (CIT) has been in poor repair for over a decade and institute authorities had sought almost €15m.
Its submission was made to a review group, chaired by former AIB managing director Kevin Kelly, which had been asked by the Higher Education Authority (HEA) to review third level capital projects.
But in its report last September the group proposed funding of €5.3m.
CIT development officer Michael Delaney said a number of options are being examined on how to best spend the funding. These could include refurbishment of the existing facilities in Sharman Crawford Street, relocating to the main CIT campus in Bishopstown or moving to a new site.
"The most economical thing would probably be to keep the college in its city location but there is not much room for expansion on the campus there," Mr Delaney said.
Among the main complaints of the college's 300 students are out-of-date printing presses, a shortage of space and the need for modern computer labs.
Students' union president Susan Holland said students would prefer to stay in the current building.
"The money being made available would barely cover the work needed to bring the building up to repair. There were big problems with the heating system last year, so students stayed at home or were sick a lot," she said.
Meanwhile, Department of Education officials are reviewing the proposals of German firm Hochtief which has taken over the Cork School of Music contract from British company Jarvis. The €60m project could be under way within the next couple of months but final contract talks have yet to commence.
"We've been going through the proposals made by Hochtief before Christmas with our advisers, mainly to check that it would meet our EU procurement obligations," said David Gordon, head of the Department of Education public private partnership (PPP) unit.