The Office of Fair Trading (OFT) said around three-quarters of UK universities it looked at had terms and conditions that could stop students graduating or enrolling into the next academic year if they owe non-tuition fee debts, such as those for university accommodation, library fines or childcare services.
Loading article content
It has written to more than 170 universities and higher education institutions to urge them to review their rules and practices and make changes where needed.
The watchdog said it considered the "blanket use" of academic sanctions in such cases, regardless of the circumstances, could breach consumer protection law.
It is concerned that some terms allow sanctions to be imposed even for minor or disputed debts.
The letter says the "use of and reliance upon contract terms to withhold graduation or progression or otherwise exclude students from tuition for non-payment of ancillary debts (such as accommodation or childcare) ...regardless of the circumstances, is open to challenge as unfair."
Nisha Arora, a senior director at the OFT, said: "We expect all institutions to ensure that their rules and methods for debt collection are fair and comply with the law."