Universities could be accused of "mis-selling" courses to teenagers who have little understanding of money matters, the public spending watchdog says. National Audit Office head Amyas Morse said young people were taking out large loans to pay for tuition fees without much effective help or advice. It compared the higher education market to financial products, highlighting how little regulation universities faced.
The government said its reforms were helping students make informed choices. But the NAO report highlights that tighter rules apply to the sale of complex financial products than to universities offering courses that may well be more expensive. The report says a student loan is likely to be a person's biggest sum for borrowing after a mortgage and will require a long-term commitment.
The average loan is expected to top £50,000 by the time it is repaid. But the decision whether or not to go to university and which course and provider to choose is typically made at the age of 16 or 17.
These choices can have a long-lasting impact on future employment and earnings prospects, the report says. And where services or markets are especially complex, consumers often need additional support and protection to make good choices.
The report says the Financial Conduct Authority requires companies to disclose clearly the risks of such products to potential customers. But for universities there are limited comparable disclosure requirements, despite the clear strong financial incentives to attract as many students as possible.
