Universities are presiding over a “mis-selling” scandal which is leaving some graduates with a lower earning capacity than people who eschew degrees, a major report finds today.

Graduates have an average debt of £50,000 but they have less consumer protection than other complex products such as financial services, according to the National Audit Office's review into the higher education market.

Prospective students who are deciding whether to go to university are put in a “potentially vulnerable” position as they are not given enough advice to make an informed decision, the Government’s spending watchdog said.

Higher education is unlike other markets since there is little students can do to influence the standard of their course once they have started.

They are also unable to improve the quality of their degree by changing to a different university, the report found.

Amyas Morse, head of the NAO, said: "If this was a regulated financial market we would be raising the question of mis-selling."

He said that the spending watchdog considered higher education as a market and as such, “it has a number of points of failure”.

"Young people are taking out substantial loans to pay for courses without much effective help and advice, and the institutions concerned are under very little competitive pressure to provide best value,” he added.