Universities UK has admitted that an institution's reputation affects its graduates' unemployment rates, even if they are of identical quality to those of another institution.
Vice-chancellors see this as one of many potential pitfalls in the funding council's attempts to design performance indicator comparisons between one university and another in terms of how successful they are in producing graduates who get jobs.
The government says a graduate employability indicator would measure the rate of return to society of the public money invested in universities.
But UUK believes that the Higher Education Funding Council for England's proposed indicator is too crude to be of use for inter-institutional comparisons and could damage attempts to widen access.