Up to £2 million could be pumped into Ludlow College as part of a merger scheme.
Staff at the college and at Herefordshire College of Technology say the partnership will secure the future of post-16 education in south Shropshire and north Herefordshire.
More teachers could be taken on full-time contracts and the number of students is expected to rise.
The colleges would keep a form of individual identity but would have a new combined name by August 2013.
The colleges would also have a single governing body.