NAO raises ‘mis-selling’ concerns over English university courses

English universities faced more negative headlines after the National Audit Office claimed that students were in effect victims of “mis-selling”.

In a report published on 8 December, the NAO says that students make a considerable financial commitment when they enter higher education in England, but can expect significantly different returns on their investments depending on the course that they take and the institution they attend.

The NAO likens this scenario to the financial services sector, where firms are required to clearly disclose the risk of their products to customers. In higher education, however, while providers must accurately describe courses and not make misleading claims, the watchdog says that the “requirements for providers to ensure that prospective students understand their prospects, alternative options and the financial commitment that comes with a student loan are limited”.

The report adds that information on universities’ websites is frequently not comparable and that “data on outcomes and prospects are often hidden or missing entirely”.

Sir Amyas Morse, the comptroller and auditor general of the NAO, said that young people were taking out substantial loans to pay for courses “without much effective help and advice”, and that “as a market, [higher education] has a number of points of failure”.

“If this was a regulated financial market we would be raising the question of mis-selling,” Sir Amyas said. “The Department [for Education] is taking action to address some of these issues, but there is a lot that remains to be done.”

The NAO report, The Higher Education Market, recommends that the government should commission an independent review of whether the new Office for Students succeeds in introducing more competition, driving up quality and improving the information provided to applicants.

It comes as UK universities face a barrage of criticism over the salaries paid to vice-chancellors, and also raises concerns about the value for money provided by English degree courses.

The report highlights data from the annual Student Academic Experience Survey conducted by the Higher Education Policy Institute and the Higher Education Academy, which show that the proportion of English students reporting that their degree was value for money had fallen from 50 per cent in 2012 to 32 per cent in 2017.

It argues that universities have no incentive to compete on price, since charging below the maximum fee of £9,250 could suggest poor quality, and that providers instead compete in ways that “do not necessarily relate directly to educational quality”, such as via marketing or estates spending.

Once students are on courses, they have limited ability to drive improvements in quality, the NAO adds, given the “lack of an effective system of credit transfers” for students switching between institutions.

In response, a Universities UK spokesman highlighted polling that indicated that students “want a personal relationship with their university, rather than the type of engagement they associate with being a ‘customer’”.

Graduates were reporting record levels of satisfaction and enjoyed significant career benefits from their degrees, the spokesman said.

“Universities in England will work with the new Office for Students to ensure that students have the necessary information to make informed decisions on going to university, and that competition works in the interests of all students,” he added.

The NAO report says that the concentration of increased participation among students from poorer backgrounds in lower-ranked universities raises the “risk of a two-tier system” between “providers that can compete for the most high-achieving candidates and those that struggle to compete at all” and that efforts to improve access may “not lead to better outcomes” for disadvantaged students.

It also warns that teaching grants for high-cost and strategically important subjects do not fully cover the increased costs involved in such degrees, creating “incentives to prioritise lower-cost subjects”. The cheaper a course is to run, the more likely a provider is to maintain offer numbers in the face of declining applications, or to expand students in response to increased demand, the NAO says.

chris.havergal@timeshighereducation.com