The Treasury Select Committee has delivered a damning verdict. It says the government mis-sold around £200 billion of student loans to more than five million young people, failing to make clear that interest rates could rise and repayment thresholds could be frozen after students had already signed on the dotted line. The committee’s report highlights a systemic failure to provide transparent information to borrowers.
The committee says borrowers were misled, and ministers now have a moral obligation to put things right. If that finding ultimately leads to compensation, the scale would dwarf almost anything Britain has ever seen. Such a payout would exceed the historic PPI mis-selling scandal, which cost the banking industry around £50 billion, and the ongoing car finance mis-selling saga, expected to cost lenders around £7.5 billion.
But, in my view, even that is not the biggest scandal. The real mis-selling happened years before the loan agreement was signed.
For more than two decades, millions of young people were sold one simple message. Go to university. Any university. Study almost any subject. Get a degree. Your future earnings will justify whatever debt you take on. That was not merely a financial proposition. It became a national article of faith, especially during the Tony Blair years when he publicly stated the goal of half the population being university graduates. Schools promoted it; careers advisers and teachers parroted the line; other politicians chimed in, and universities could not believe their luck. Neither, as it turned out, could many new universities, converted from the ranks of legitimate technical colleges and some less auspicious operators. The promise was reinforced by media campaigns and government incentives that portrayed higher education as the sole pathway to social mobility.
The result is an entire generation carrying debts running into tens of thousands of pounds, many working in jobs that never required a degree in the first place. These graduates often find themselves in precarious employment, struggling to meet loan repayments while earning wages that do not reflect their educational investment.
Of course, some degrees are enormously valuable. Medicine, engineering, dentistry, nursing, law, computer science and many other professional qualifications remain outstanding investments for both individuals and society.
But can the same honestly be said of every degree now being marketed? I do not believe it can, and even degrees that I consider valuable already struggle to generate sufficient income for graduates to live and prosper. And then there is AI to factor in! The rapid advancement of artificial intelligence adds further uncertainty to the future relevance of many qualifications.
Universities today are no longer simply centres of learning. They are, in reality, large commercial organisations competing for customers. Their income depends upon filling lecture theatres. More students mean more revenue. Empty seats cost money. This commercial pressure encourages institutions to broaden entry criteria and to market programmes with limited labour-market relevance.
When any business is selling a product worth tens of thousands of pounds, financed almost entirely by government-backed borrowing, it should be expected to justify the claims it makes about that product. Accountability mechanisms should therefore be strengthened to protect borrowers from exaggerated promises.
