Students are being asked to gamble with their lives

Buried (as they all are) in a PDF on the provider’s policy page, it says that the risk that the Office for Students (OfS) will withdraw its registration is “high”, and that the risk that it will need to close due to financial viability is also currently “high”.

The same document rates as “medium” the risks of programme suspensions, loss of specialist staff and the modules they teach, and “medium” for major changes to programme content in the year ahead, let alone across the length of a degree.

In other words, even if the provider survives, the course you enrolled on may well not.

I can make a moral argument that this is the kind of information a prospective student would want to know before committing their fees (whether loaned to them or not), along with maintenance costs, accommodation deposits, and – for international students – visa fees.

Students are asked to tick a box confirming they’ve read the Student Protection Plan (SPP) when they enrol. Not only are they unlikely to have done so, by then they’ll have already accepted their offer, paid deposits, made accommodation arrangements, and turned down places elsewhere.

The transactional decisions have already been made. But the entire point of consumer protection law is pre-contract disclosure. Enrolment is the contract.

Pay your fees on your credit card

In one sense, this particular provider deserves some credit – it has disclosed (I suspect under duress) what looks like a real risk assessment, however inaccessibly. Having read every other SPP for providers with TDAPs last night, I can say with some confidence that most exude too much of it – despite OfS telling us last month that 45 per cent of providers are forecasting deficits this year and nearly one in six have less than 30 days’ liquidity.

The aggregate data is public, while the provider-specific information is not. Prospective students, meanwhile, can’t tell whether their chosen university is in the 45 per cent or the 55 per cent.

Last week’s Education Select Committee session on university finances reminds us just how precarious the situation is. OfS CEO Susan Lapworth disclosed that 24 providers are in the regulator’s highest risk category – a 12-month exit horizon – with 7 of those being large providers.

Fifty providers in total sit in the top two risk categories. And Lapworth acknowledged that the current framework “would be unlikely” to secure reasonable outcomes for students if a large provider were to close, and that regulatory tools “lose bite” as institutions approach crisis.

When asked whether at-risk institutions should be publicly identified, Minister Jacqui Smith was unequivocal – it would be “wholly irresponsible” to do so. The reasoning is familiar from banking crises – you don’t want to trigger a run on the institution by spooking depositors. But there’s a big difference between banks and universities.

What struck me most about the Committee session was how little time was spent on student protection in general, and what happens to students while institutions are in distress specifically.

I often call it the difference between explosion and implosion. Explosion is the dramatic scenario – a provider fails, students can’t complete, there’s a scramble to deliver teach-out arrangements, and possibly transfers to other providers.

Implosion is already happening. The medium risks in that SPP – suspended programmes, lost specialist staff, major content changes – are now widespread. They’re the survival strategy.

In OfS’ own polling the other week, 23 per cent of students reported lower quality teaching than expected, 22 per cent experienced fewer contact hours, and 21 per cent reported limited access to academic staff. They’re the cost of institutional rescue, borne by students who weren’t told that a rescue was underway.

Neither explosion nor implosion risk is properly disclosed. Maybe that would be fine if students were protected. The “no run on the bank” logic works if someone else is underwriting the risk. But right now, nobody is – except students. Which is odd. Because they should be.

It’s the law

The Digital Markets, Competition and Consumers Act 2024 updated the rules on unfair commercial practices. Section 227 deals with misleading omissions – where a trader fails to provide information that the “average consumer” needs to make an “informed transactional decision.” For a huge financial commitment like an HE course, provider viability is plainly material.

Section 227(4) is particularly interesting. It says information is treated as having been omitted if it’s provided in a manner that is “unclear, unintelligible, ambiguous or untimely.” A 32-page PDF in regulatory language, buried on a policy page, disclosed after applicants have made binding commitments, is three failures in one.

And section 246(3) adds that where information is “concealed” by a trader, the average consumer is taken as not knowing it “even if they might know it from some other source.” The SPP exists – it’s technically accessible. But the law seems fairly clear that technical accessibility isn’t the same as meaningful disclosure.

Then there’s section 230 on invitations to purchase. Any course advert that includes fees constitutes an invitation to purchase, which triggers requirements to disclose the “main characteristics” of the product. Is a high risk of provider closure a main characteristic of an educational service that might not be completable? I’d suggest it is.

And the transactional decisions occur long before enrolment – applications, offer acceptances, deposits, accommodation contracts, visa applications. By the time students see the SPP, if they ever do, the decisions have been made.

The CMA’s guidance on the DMCC Act also emphasises “professional diligence” – traders must have regard to consumers’ legitimate interests and not exploit their lack of experience.

Eighteen-year-olds making their first major financial decision, international students making irreversible life choices based on incomplete information – burying high risk assessments in impenetrable documents doesn’t obviously meet that standard.

OfS’s Condition C1 requires providers to demonstrate “due regard to relevant guidance about how to comply with consumer protection law,” including ensuring information is “timely, accessible and enforceable.” But it couldn’t appear less interested in enforcing it.

If C5 applied, which (for now) only applies to new providers joining the register, it would be even worse. The prohibited behaviours include:

…advertising, promoting or otherwise offering courses… without disclosing the existence of any reasonable grounds the provider may have for believing it may be unable to provide these.

OfS has written the standard for proper disclosure, knows what consumer protection looks like, and has chosen to apply it only to new entrants, not to the established providers in financial distress now. If C5 did apply, advertising without prominently disclosing documented high closure risk would surely be a prohibited behaviour.

Other prohibited behaviours in C5 – which, let’s remember is based on consumer law now – compound it:

Displaying or otherwise presenting information about the provider or its activities which is likely to have the effect of misleading a student… into believing something about the provider or its activities which is inaccurate or untrue.

The prospectus, website, open days, and marketing materials present this provider and its programmes as all fine. The SPP says the opposite. If the overall presentation creates an impression inconsistent with the provider’s own risk assessment, that’s misleading by omission – even if no individual statement is false

Both consumer law and C5 are also concerned with clarity and legibility – but the SPP uses language like:

…the risk that the Office for Students would withdraw our registration is high until we have implemented our plan to secure long-term financial viability and sustainability.

Would an average 18-year-old applicant, possibly first in family to attend university, understand what that means? Would they grasp that “high” means the provider itself considers this a probable rather than remote scenario?

Both consumer law and C5 also require documents to be “drafted in clear and understandable language, and prohibits documents that are “otherwise confusing or unclear.”

And on course change policies (implosion), another prohibited behaviour runs like this:

do not contain provisions that would ensure all students are treated fairly in practice if any of the changes to courses set out in i. above take place.

The SPP might describe communications within 24 hours, meetings with Programme Convenors, a potential Student Protection Panel, complaints procedures and “case-by-case” consideration of compensation.

But none of that “ensures” fair treatment “in practice.” It’s a statement of process and a declaration of hope. There’s no fund, no entitlement, and no guarantee. And Lapworth herself told the Select Committee the current framework “would be unlikely” to secure reasonable outcomes.

Wholly irresponsible

OfS knows that this is a problem. Its own research found that only 50 per cent of students can describe their rights and entitlements, 36 per cent doubt that complaining would achieve anything, over three-quarters say promises haven’t been fully met, and only 8 per cent have heard of external redress. When 76 per cent of students believe promises weren’t kept but most conclude there’s no point complaining, something has gone very wrong with the protection model.

To be fair to the regulator, it’s under considerable pressure to prioritise sector financial stability over student protection. An OfS that was interested in student protection robustly would require genuine disclosure of financial risk, would treat buried SPPs as C1 breaches, and would lift a finger to enable the complaints that students have correctly concluded are futile.

In other words, students’ learned helplessness isn’t a bug – it’s load-bearing. The system depends on students not using it.

Smith’s “no run on the bank” logic is borrowed from financial services, where it makes more sense – because in financial services, someone else is underwriting the risk.

The Financial Services Compensation Scheme guarantees deposits up to £120,000 as of yesterday, funded by an industry levy. The Bank of England has special resolution powers. Capital requirements and living wills exist precisely so that when confidence is maintained, it’s maintained with reason. Depositors don’t run because they know they’re protected regardless of which institution fails.

Universities have somehow imported the opacity without the guarantee. There is no deposit protection scheme. There’s no resolution regime. SPPs describe processes for considering compensation, not entitlements to receive it. Students are unsecured creditors. The sector has the confidence-maintenance benefits of not naming at-risk institutions while providing no corresponding protection to the students bearing the actual risk.

For package travel, ATOL requires any business selling flights or air holidays to hold a licence, with consumers protected by a pre-funded scheme if the operator fails. The protection is confirmed at the point of booking – not buried in a policy document, but handed to you as part of the transaction. The industry pays the levy, and consumers get guaranteed refunds or repatriation. The scheme exists because the travel sector recognised that asking consumers to bear uninsured counterparty risk was both legally untenable and commercially destructive.

The Pension Protection Fund works similarly. Defined benefit pensions involve a similar timing problem – you pay in now, the benefit comes later, the provider might become insolvent in between. The PPF is funded by a levy on all eligible schemes, calibrated to risk. If your employer’s pension scheme fails, you receive a statutory entitlement, not a discretionary consideration.

The Solicitors Compensation Fund operates like that too. When a solicitor misappropriates client money or a firm collapses, there’s a fund maintained by the profession – via practising certificate fees – that compensates clients, up to £2 million per claim. The mechanism exists before the crisis, not as an improvised response to it.

Even funeral plans now have FCA-mandated protection after the Safe Hands Plans collapse left consumers stranded. Providers now have to hold client money in trust or have insurance backing. The sums involved were typically £3,000-4,000 – less than most international students pay in non-refundable deposits.

New-build homes come with NHBC warranties. If the developer goes bust before completing remedial works, or defects emerge within ten years, the warranty provides cover. Builders pay for it. Buyers get a certificate at the point of purchase – not a 32-page PDF on a policy page.

Even a student renting a flat has their £500-1,500 deposit protected in a mandatory government-backed scheme. If the landlord fails to protect it, they face penalties of up to three times the deposit. That same student pays at least £9,353 per year in tuition fees with no equivalent protection. The deposit for their bedroom is guaranteed – the investment in their degree is not.

You’re on your own

None of that exists for students. What we have, in effect, is a system that uses students as the deposit insurance scheme of last resort. The sector collects premiums while providing no coverage. Students commit irreversible resources on the basis of materially incomplete information, with no protection if the risk materialises beyond a discretionary government response.

And it’s not just collapse they’re unprotected against. The implosion – the hollowing out of courses while institutions fight to survive – is equally undisclosed and equally uncompensated. SPPs promise “case-by-case” consideration of compensation claims through complaints procedures. OfS’s own research shows 36 per cent of students doubt complaining would achieve anything. They’re still not wrong.

Jacqui Smith calls public identification “wholly irresponsible.” But in the absence of a funded guarantee, the truly irresponsible thing is the current arrangement – knowingly recruiting students into institutions quietly classified as high-risk, to courses that will likely be degraded to keep the provider afloat, because telling them might put others off.

If the sector wants to keep recruiting without honest risk communication, it should pay a levy that guarantees students are made whole when things go wrong. And if the government wants to maintain confidence without disclosure, it needs to fund (or at least set up) a protection scheme for collapse, and ask OfS to hold feet to the fire on delivering what was promised – not explaining wafer-thin mitigations when it can’t be.

If neither is willing to do that, then the SPP regime needs fundamental reform – prominent disclosure, plain language, pre-application timing, and genuine entitlements rather than aspirational processes.

Right now, students are being asked to accept information asymmetry as if insurance exists, while bearing real risk as if it doesn’t. OfS knows it, and the government knows this. The only people who don’t are the people the system is supposed to protect.