Universities and colleges offering “poor quality” courses are set to face tough regulation and fines under new proposals from the Office for Students (OfS).

In a consultation published on Thursday, the regulator said it will set thresholds for the number of students who drop out of courses, while ratings of university teaching will include a new “requires improvement” category as well as ratings of gold, silver and bronze.

The OfS said it is looking to stop students receiving a “performance that is below our minimum expectations”, given they “are likely to be paying substantial sums”.

These proposals mark a landmark moment in our work to tackle poor quality provision in English higher education

At least 80% of students should continue studying into their second year of an undergraduate degree, it said, 75% should finish their degree, and 60% should go on to further study or professional employment .

Universities not meeting the thresholds could be investigated, face fines, or have their access to student loan cash restricted.

As part of the OfS’ new Teaching Excellence Framework (TEF), universities would be rated as gold, silver or bronze over a four-year cycle, based on their students’ outcomes and experiences, with the ratings published on the Ucas and DiscoverUni websites.

Universities not meeting those standards would be rated “requires improvement”, with the figures for teaching and continuation published every year.

Our university system is acclaimed as world class but there are too many pockets of poor quality

Universities that did not take part in the TEF, had their rating suspended, or were rated as “requires improvement” would not be able to charge as much money.

Some respondents to the OfS’ November 2020 consultation said the “proposals would unfairly disadvantage providers with high proportions of students from disadvantaged backgrounds”.

Nicola Dandridge, chief executive of the OfS, said: “These proposals mark a landmark moment in our work to tackle poor quality provision in English higher education.

“Students from all backgrounds deserve to be on good courses leading to qualifications which stand the test of time and prepare them well for life after graduation.

Universities must be able to communicate why they offer the courses they do, and the value of those courses, to prospective students, employers and the public

“Many universities and colleges in England run high quality courses that deliver positive outcomes for students.

“The thresholds that we have proposed will not affect them.

“They are instead designed to target those poor quality courses and outcomes which are letting students down and don’t reflect students’ ambition and effort.”

Ms Dandridge said the proposals are likely to “generate significant debate” and that the OfS will consider consultation responses before a final decision is made.

Through this tough regulatory action we are protecting students from being let down by these institutions, whilst also ensuring those delivering outstanding teaching are properly recognised

Higher and further education minister Michelle Donelan said students “deserve an education that will help them achieve their dreams”, adding: “We need to crack down on those universities that are not delivering this ambition.”

She said: “Our university system is acclaimed as world class but there are too many pockets of poor quality.

“Through this tough regulatory action we are protecting students from being let down by these institutions, whilst also ensuring those delivering outstanding teaching are properly recognised.”

The news comes after Universities UK published a new framework for tackling low quality degrees on Monday.

Professor Julia Buckingham CBE, chairwoman of Universities UK’s advisory group for programme reviews, said: “Universities must be able to communicate why they offer the courses they do, and the value of those courses, to prospective students, employers and the public.

There is a real risk that universities, aiming to avoid sanctions, will simply stop admitting students who they deem unlikely to progress

“Although UK universities have a strong track record of delivering high quality courses which equip students with the knowledge, skills and attitudes needed to progress to rewarding careers, universities know there is a need to address public concerns about potentially low value courses.”

Unions said that the proposals risk introducing “de facto” minimum entry criteria into higher education.

UCU general secretary Jo Grady said the plans would “harm the very students they are ostensibly designed to help”.

She said: “Not only will the thresholds damage courses which play an important role in widening participation, but there is a real risk that universities, aiming to avoid sanctions, will simply stop admitting students who they deem unlikely to progress.

“This amounts to the stealth introduction of de facto minimum entry criteria. ”

“If course quality is a real concern for regulators and ministers, they would be best advised to encourage universities to take action on the real crises on campus, including deteriorating pay, rampant casualisation, and a workload crisis which fails staff and students alike.”