OFT warns universities over student debt rules

The Office of Fair Trading has told universities to review rules that stop students from graduating if they have non-tuition fee debts.

February 18, 2014

The OFT analysed the terms and conditions of 115 UK institutions, and found that approximately 75 per cent include provision to prevent students from graduating or enrolling onto the next year of their course if they owe debts for services such as university accommodation, childcare, or because they have failed to return library books on time.

The OFT said the results of the investigation “will be fed into” its call for information into undergraduate higher education in England.

The call for information is expected to result in a market study of English higher education by the new Competition and Markets Authority – likely to have a major impact on the sector.

In a press release, the OFT said that the use of academic sanctions in such instances could breach consumer protection law, and expressed particular concern that some terms allow universities to impose sanctions on students even when they owe small amounts, or a debt is disputed. 

“Preventing progression or graduation not only affects students’ educational experience but could also significantly harm their future employment prospects and ability to pay off their debts,” said Nisha Arora, senior director in the OFT’s services, infrastructure and public markets group.

“We expect all institutions to ensure that their rules and methods for debt collection are fair and comply with the law.”

The OFT has produced a report identifying alternative approaches to tackling issues relating to students who owe money, and has sent a letter to 170 universities and higher education institutions urging them to proactively review their rules and practices, and revise them where required.

The OFT began its investigation in July 2013 following a complaint from the National Union of Students.

Colum McGuire, NUS vice president (welfare), said: “It’s almost laughable that students who are in thousands of pounds of tuition fee debt were having academic sanctions placed on them for money owed for non-academic debt.

“Students who owe money for accommodation, overdue library books or other non-academic debt should certainly pay off the money they owe, but this sanction was disproportionate, and actually made it more difficult for students to repay by restricting access to student support or making it more difficult to secure employment in an already challenging job market.”


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