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 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.
The PPI mis-selling scandal, which cost the banking industry around £50 billion, has long been regarded as the biggest consumer compensation scandal in British history.
The ongoing car finance mis-selling saga is already expected to cost lenders around £7.5 billion.
Together they barely scratch the surface compared with a potential £200 billion student loan fiasco.
But, in my view, even that isn’t 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 wasn’t 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 graduate.
Schools promoted it; careers advisers and teachers parroted the line; other politicians chimed in, and universities couldn’t 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 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.
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 don’t believe it can and even on my valuable list already struggle to generate sufficient income for graduates to live and prosper. And then there’s AI to factor in!
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 means more revenue. Empty seats cost money.
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.
Instead, generation after generation of school leavers were encouraged to believe that obtaining a degree, almost regardless of subject or employment prospects, was the automatic route to career success. For many, it simply wasn’t.
If a private company sold financial products using optimistic assumptions while downplaying the risks, regulators would rightly come knocking. So why should universities be treated differently?
Their marketing, their graduate outcome claims, and the expectations they create deserve far greater scrutiny than they receive today. And then there is the Government, which cannot wash its hands of this scandal
Government didn’t merely write the loans. It created the finance, promoted the system, encouraged participation, changed repayment terms after borrowers had signed up, all the while reinforcing the message that university was the best path for almost every young person.
In other words, it wasn’t just the lender, it was an active participant in selling duff-degrees, which makes ministers doubly responsible.
If the Treasury Committee is right that students were misled about the loans themselves, then serious questions also need to be asked about the far bigger sales pitch that surrounded those loans.
Young people were not just sold finance; they were sold expectations that realistically could never been realised. That, in my opinion, is Britain’s true higher education mis-selling scandal.
The loans were only ever the vehicle. The Treasury Committee has exposed the loans. Now it’s time someone exposed the lies.
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