Allowing universities to enrol as many students as they want has harmed the economy, diminished the value of higher education, and created the false view that anyone without a degree is a "failure", according the nation's most prestigious universities.

In a provocative speech to business and university leaders, Vicki Thomson, executive director of the Group of Eight (Go8) universities, will argue the surge of enrolments over recent years has left too many graduates with "broken dreams and a large student debt".

She also blasts employers for demanding university qualifications for jobs that don't need them and expecting universities to operate as if they were factories churning out widgets.

"Why are we all so reticent about stating the obvious - that university isn't for everyone," Ms Thomson will tell the Graduate Employability and Industry Partnerships Forum in Sydney on Monday.