National Audit Office says if English universities were banks, they would be investigated for mis-selling, as students say they do not get value for money

This article is more than 2 years old

This article is more than 2 years old

Students taking out huge loans to pay for higher education are being failed by universities in England, with only one in three saying they receive value for money according to a stinging new report by the government’s spending watchdog.

Amyas Morse, the head of the National Audit Office (NAO), said that if universities were banks they would be investigated for mis-selling.

The sector is already facing questions over extravagant pay for vice-chancellors.

The NAO said the Department for Education (DfE) needs to do more to help “vulnerable” students make better choices about courses. It has called on the DfE to provide more aggressive oversight to ensure value for money.

Morse said: “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.

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

The NAO found that the increased numbers of disadvantaged students now attending universities were mainly going to lower-ranked institutions – “which risks creating a two-tier system”, dividing those from rich and poor backgrounds.

Meg Hillier, the Labour MP who chairs parliament’s public accounts committee, has accused the DfE of taking a “hands-off” approach that has left students floundering with £9,250 annual tuition fees and debts totalling £50,000 on average.

“The government is failing to give inexperienced young people the advice and protection they need when making one of the biggest financial decisions of their lives,” she said.

“It has created a generation of students hit by massive debts, many of whom doubt their degree is worth the money paid for it.”

The report’s conclusions were echoed by Robert Halfon, the Conservative MP who chairs parliament’s education committee, who said students are increasingly questioning their ability to repay loans and the value of their degree.

Facebook Twitter Pinterest Dame Glynis Breakwell, vice-chancellor of the University of Bath, who was the highest-paid vice-chancellor in the UK.

“Recent high-profile examples of stratospheric levels of pay and perks for some university vice-chancellors do little to suggest universities recognise the struggles of their students or, indeed, of poorly paid university staff,” Halfon said.

The NAO report warns that universities are too eager to spend their income on building facilities to match their rivals.

“There is a risk that increased capital spend represents a zero-sum game, with little overall benefit to educational quality,” the report states.

Universities “have a financial incentive to prioritise young, full-time students, who are typically less costly to teach” than part-time or mature students, whose numbers have fallen sharply since tuition fees rose to £9,000 under David Cameron’s Conservative-led government in 2012.



In response, a DfE spokesperson said the government already planned to conduct “a major review of funding” for tertiary education.

“Our reforms, embodied by the Higher Education and Research Act, are helping students make more informed choices about where and what to study, ensuring they get good value for money,” the DfE said.

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A spokesperson for the Universities UK lobby group said students were rightly demanding greater value for money following the shift to paying tuition fees.

“Universities have increased investment in teaching and learning and students are now reporting record levels of satisfaction with their courses,” it said.

But Andrew Adonis, the Labour peer who has repeatedly criticised the level of tuition fees and student debt, said the NAO’s findings supported his views.

“There is huge discontent at the level of fees and poor value for money in universities. It is part of the reason why there is so much anger about the astronomic pay of vice-chancellors,” Adonis said.

“Universities need to respond by cutting top pay, improving teaching, cutting fees and offering a better service.”

Sally Hunt, general secretary of the Universities and College Union, said the proportion of students who said they received value for money had fallen from a half in 2012 to just a third.

“It is perhaps not a surprise that fewer students think their course is value for money now they face bigger debts and keep seeing stories in the press about how their vice-chancellors seem to be creaming off any profit,” Hunt said.

Facebook Twitter Pinterest Prof Christina Slade, vice-chancellor of Bath Spa University.

In recent weeks a string of vice-chancellors have been attacked for high pay and weak corporate oversight, including the pay and retirement package worth more than £800,000 of Prof Christina Slade, vice-chancellor of Bath Spa university.

Dame Glynis Breakwell, vice-chancellor of the University of Bath, recently said she would resign after criticism of the oversight of her £468,000 a year pay and perks, the highest in the UK.

Breakwell responded to her critics on Thursday, saying she intended to remain on full pay until the end of February 2019, despite stepping down next summer.

Prof Shearer West, the newly-installed vice-chancellor of the University of Nottingham, used her inaugural address on Thursday to appeal for calm over the recent controversies.

“At the moment it’s not possible to open a newspaper without finding ourselves in the spotlight for all sorts of negative reasons,” she said.

“The individual complaints, whether or not they are justified, accumulate to make it look as if universities are failing in every possible way.”