Universities have been accused of presiding over a ‘mis-selling’ scandal which leaves many graduates with a lower earning capacity than those who do not undertake degrees, a report reveals.
According to the National Audit Office (NAO), graduates are leaving university with an average debt of £50,000 but enjoy less consumer protection than other complex financial products.
The report is a review of the higher education market in England and found that prospective students who are considering whether to go to university are being placed in a ‘potentially vulnerable position’ because they are not given the advice they need to make an informed decision.
The government spending watchdog says that higher education is not like other markets since students have little influence over the standard of their degree course once they begin.
The report also points out that students are unable to improve the quality of the degree they start by switching to a different university.
‘We would be raising the question of mis-selling’
The NOA’s head, Amyas Morse, said: “If this was a regulated financial market then we would be raising the question of mis-selling.”
He added that higher education is considered to be a market and, as such, there are a ‘number of points of failure’.
Mr Morse said: “Young people are taking out substantial loans for paying for courses without much effective advice and help – the institutions concerned are under little competitive pressure in providing best value.”
The government says its reforms of the higher education sector are aimed at helping students to make an informed choice.
However, the NOA’s report highlights that a student loan is probably a person’s largest amount of borrowing after a mortgage and requires a long-term commitment to repay it.
Report on students attending universities
The report on students attending universities also highlights:
- Just 32% of university students believe their course offers value for money
- Students starting a degree course this year will leave university with an average debt of £50,000
- Upfront funding for higher education in England costs £9 billion
- Just 26% of 18-year-olds from a disadvantaged background entered higher education
- Capital investment in the five years to 2016 by universities was £1.5 billion.
The chair of the Public Accounts’ Committee, Meg Hillier MP, says the government is failing to give inexperienced young people the protection and advice they need when they are making what is one of the largest financial decisions in their lives.
She explained: “We have created a generation of students that have been hit by massive debts and many of whom doubt their degree is worth the money they paid for it.”
Responding to the report, Universities UK said that universities had increased their investment in learning and teaching and that students are reporting record levels of course satisfaction.
A spokesman added: “Graduates leaving universities are increasingly in demand from employers and benefit from their degrees. They earn almost £10,000 a year more, on average, than those without degrees and are more likely to be in employment.”
The organisation pointed out that they would be working alongside the new Office for Students to ensure that young people have the relevant information to help them make an informed decision and to help ensure that the competition between universities works in the interests of students.
The NOA’s report into England’s Higher Education market is on their website.