With thousands of students scrambling for a university place, clearing is never the calmest of times. But this week, when A-level results are announced, there will be more than the usual sense of apprehension in admissions offices across the country. As the credit crunch bites, staff are aware that every place they offer this summer represents not only the opportunity to study but also to seek shelter from the storm. Those who do not make it into education, employment or training will form part of a "lost generation" whose lives have been scarred by the recession, it has been warned. What is more, there are a number of uncertainties about this year's clearing process and fears of a tight squeeze on places.

Laura Kishore, chair of the admissions group of the Academic Registrars Council, admits that there is some anxiety about how the summer admissions period will go. "Admissions officers are used to change - it sometimes seems as if there is never a year when some aspect of the process is not different - but this year a whole series of things have stacked up, creating more uncertainty than usual," she says.

"The Government's announcement of 10,000 additional places came very late in the cycle. Before that we were in a situation where most institutions had received high levels of applications but there was an apparent government clampdown on excess recruiting. Then there is the new admissions process being introduced, the 'adjustment' period.

"When you start putting all this together, I think it does start to look tough for applicants," she admits. "Applicants who haven't met the conditions they were set in their university offer may have to wait a little longer than they have had to in previous years to learn whether they have a place. I fear they will have to be patient - and that is not a great message."

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The problems began last autumn when John Denham, then Universities Secretary, announced that there would be slower growth in the number of university places this autumn than originally planned.

Instead of the 15,000 new places for students that universities had been promised, the number was reduced to 10,000, of which only 3,000 were full-time places. In addition, institutions found themselves threatened with severe financial penalties for over-recruitment.

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The decision, which stemmed in part from miscalculations over the cost of student support and arrived just as universities experienced record levels of demand for places thanks to the recession, certainly did not make the Government look good. The last set of figures before clearing showed that 52,000 more people had applied to university than at the same point last summer, leading to claims that more than 35,000 well-qualified students would not secure places.

Young people, it seemed, were seeking to delay their entry into the job market. An accompanying rise in the number of mature applicants suggested that those who found themselves out of work were looking for opportunities to retrain or gain qualifications that would give them an advantage in the employment market. But just as they did so, they faced a bottleneck: the Universities and Colleges Admissions Service estimated that the number of places in clearing would be halved. It was not long before opposition parties were having a field day, backed by campaigns mobilised by universities and students for more places.

In June, the Million+ group of universities launched a report warning that the cap on university numbers would leave thousands of bright teenagers on benefits. "Young people who might have gone to university face the real prospect of being relegated to the ranks of the long-term unemployed, with all the personal, family and health... consequences this brings," it said.

The message from the National Union of Students (NUS) was equally uncomfortable for Labour. It claimed that students from the poorest backgrounds, who typically apply to university later in the cycle, would be hit hardest.

"I have no doubt that those worst affected will be from the very backgrounds this Government has sought to attract," said Wes Streeting, president of the NUS.

In an opposition day debate on 6 July, John Hayes, the Shadow Minister for Lifelong Learning, Further and Higher Education, put forward a motion that accused the Government of failing young people.

"This house deeply regrets that young people are among the principal victims of the recession; is profoundly concerned that limits on entry to higher education mean tens of thousands of suitably qualified young people will be left without a university or college place in autumn 2009; is concerned by reports that graduates face the worst job prospects for decades; regrets that the number of young people starting an apprenticeship is falling and that the number of young people not in any kind of education, employment or training has risen to nearly one million," he said.

"Friends, in sorrow. We are sorrowful for the school-leavers who hoped to go to university but will not... Every member of the House should share my sorrow that Britain in 2009 has come to this, and share my anger at a Government who could have done more and should do better."

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David Lammy, the Higher Education Minister, leapt to the defence, reminding the House of Commons that getting a place at university had always been competitive. "This is a nervous time for students and parents as they wait for A-level results, but this year, as always, every student who has an offer from a university and meets the grades will get a place. Against a backdrop of expansion, with 300,000 more students in the higher education system than in 1997, we should remember that we are talking about a competitive process. In any year, the proportion of applicants who gain a place is about 80 per cent," he said.

At the other end of the university process, the picture looked even less cheery for the class of 2009. "This will probably be the most gloomy set of graduation parties ever," Stephen Williams, the Liberal Democrat Universities Spokesman, told the House.

"We should remember that this cohort of new graduates are from the top-up fees generation - the first people to leave higher education with ?9,000 of fee-related debt that they will have to pay off during their working careers. What a total change from the prospects that they must have thought were opening up in front of them back in the autumn of 2006 when they commenced their studies," Williams said.

All summer, newspapers have reported gloomy news on employment prospects, including an average queue of 48 candidates for every graduate job. Data from the Office for National Statistics showed that 17 per cent of 18- to 24-year-olds are unemployed - the highest figure since the early 1990s and, at more than twice the national average, the biggest proportion of any age group.

A study by the Association of Graduate Recruiters suggested that the number of graduate vacancies had fallen by 25 per cent and was approaching depths not seen since the start of the last decade, while the Chartered Institute of Personnel and Development found that nearly half of companies did not plan to hire graduates or school-leavers this year.

According to High Fliers Research, only 21 per cent of students at the 30 most selective universities in the country expect to start a full-time graduate job at the end of their degree. "Even if we are generous and assume that, because of the economic times, more students are going on to further study or taking time off, we are still left with about 160,000 students looking for work," Martin Birchall, managing director of High Fliers, told a Westminster Education Forum event in June.

"Sadly, the number of vacancies for graduates had dropped by at least 20 per cent over the past two years, so we could find only about 80,000 graduate-level vacancies, which means we have a shortfall of more than 80,000 places for those leaving university this summer."

But the forum was told that graduates still have a major advantage. David Caldwell, who was then director of Universities Scotland, argued that an under-supply would be far more worrying. He said: "Yes, this summer a smaller proportion of graduates will go straight into graduate jobs than in previous years, but graduates are still going to be better placed in the jobs market than anybody else. They are the people, by and large, who will... over a period of two or three years, find their way into appropriate graduate jobs. The big problem our economy and our society will face is if we don't have enough graduates to fill these jobs."

Pam Tatlow, chief executive of Million+, says that the Government's freeze on student places during the recession amounts to a massive waste of opportunity. "You are much more economically resilient, even in times of recession, with a graduate qualification. If we want to invest in the future what we should be doing is investing in higher education... This is the ideal time to capture this, particularly in terms of people who have got experience from industry and a whole range of walks of life."

One recent posting by a reader on the Times Higher Education website summed up the prevailing mood. "Just as virtually all companies are freezing plans to recruit, it turns out that universities cannot take up the slack either. So there will be an entire generation of school-leavers, this whole year's output, who will not be integrated into society... This will have a knock-on effect through their lives - they'll never quite find the way to realise their potential: a lost generation."

It is a phrase that has been ringing in the ears of ministers all summer. "Labour is finished unless it can rescue the lost generation," warned a recent Daily Telegraph headline. David Blanchflower, a labour market expert who recently stepped down from the Bank of England's Monetary Policy Committee, said unemployment among the young had become a "national crisis" and would become the biggest issue at the next general election.

Moreover, the "lost generation" is finding its voice. Campaigning graduates founded the group Youth Fight for Jobs and in June held demonstrations outside the offices of Lord Mandelson, the First Secretary, whose remit includes higher education.

When it comes to university places, David Sweeney, director of research, innovation and skills at the Higher Education Funding Council for England, has urged students to keep things in perspective.

Speaking at the Westminster Education Forum event, he said: "It is not good that we have been successful at STEM (science, technology, engineering and mathematics) demand raising and we are not able to offer, it would look like, places to all the students who want to study those and other subjects. But let's just remember, it's not quite as dramatic... as a lost generation, because there are actually more places this year than there were last year.

"The number of students is going up, not down. It is not going up as fast as you might like and as I might like, but it is going up," he said. He went on to urge the NUS to "cast aside the rhetoric".

But Aaron Porter, vice-president of the NUS, responded: "We will see you on A-level results day."

By mid-July, matters had reached tipping point. Suddenly, newspaper headlines declared that youth unemployment was the Government's top priority. During a grilling by a select committee of MPs on 16 July, the Prime Minister revealed that there would be an announcement on student numbers. Days later, just weeks before A-level results day, it was confirmed that universities would have 10,000 additional places.

But that was only half of the story. The places would be all in the areas of science, technology, engineering and maths and would be only part-funded: the Government promised to pay the student-support costs but not the corresponding teaching grant.

It was not long before the U-turn looked to be in danger of backfiring. The CBI suggested that the Government was trying to offer degrees "on the cheap", while some of the country's most selective institutions, including the universities of Oxford, Cambridge and Imperial College London, declared that they would refuse the additional places. Nor was the NUS satisfied - it pointed out that thousands of non-STEM students would still be left without a place this summer.

On top of this, there were concerns about the impact of the additional places when combined with the new "adjustment period". Under the new system, students whose A-level results exceed the offers made to them by their first-choice university will be given a week-long window in which to examine other options, allowing them the chance to "trade up" to a course with higher entry requirements.

Less popular universities have expressed concern that their best students could be "poached" by more selective institutions. On the other hand, courses at selective institutions are more likely to be oversubscribed, meaning that there will probably be few places available to trade up to.

Les Ebdon, chairman of the Million+ group of universities, says: "I think all adjustment will do is create a lot of disappointed students. I called it at one time 'a poachers' charter'. But it won't be that this year because there won't be any places to poach for."

While warmly welcoming the 10,000 extra places, he expects them to have a limited effect on clearing. Some universities were already in danger of recruiting more students than the Government has allowed and will, he believes, simply use the new places for students who are already in the system to avoid financial penalties.

"I still think it will be a very, very tough year to find a place in clearing," Ebdon concludes.

The ability to trade up during adjustment could prove to be something of a mixed blessing. Those students who are allowed to may feel pressure to make a quick and poorly informed decision about where to study, some admissions experts fear.

Kishore says that her experience at her own institution, the University of Reading, has shown her that the later students apply, the more likely they are to drop out. "There is too much pressure and people don't have the time to do the research," she says.

"During clearing, applicants are so relieved - after being rejected by somewhere they'd built up a relationship with over six months - to have someone say 'Yes, we'll have you' that they may accept an offer for the wrong reasons."

A recent study from London South Bank University supports her views. Research tracking more than 500 students through the clearing process found that 56 per cent believed they would have made a different decision had they applied earlier in the year, or would have felt more confident about starting university. Of this group, 14 per cent said they would have gone to a different university altogether.

Despite the economic downturn, for those who fail to achieve their predicted grades and find themselves in clearing, Kishore believes it may still be better to consider holding on and reapplying for the following year. "If it were my child in that position, I would be advising him or her to stop and take a year out. I don't think people make good decisions in clearing," she said.

However, Louise Andronicou, director of recruitment and marketing in the faculty of arts and human sciences at London South Bank University, strongly disagrees.

"I work on clearing every year, and I know that students often find out more about their university through clearing than they would have done if they had applied earlier. Students make an informed choice - we hold a series of summer open days, for instance.

"A lot of students tell me, 'I was upset that the university I originally chose hadn't given me a place, but now that I know more about your university, I actually think it is better suited to me'."

She is "horrified" by the suggestion that students might wait and reapply next year.

"What will those students do for the year - sign on the dole queue? There has been so much hype and speculation about clearing this summer, but I think it is just scaremongering. Yes there may be fewer places, but there are still plenty of universities that do have space. I think all that is going to happen is that some universities won't be in clearing for as long as they have been in the past, and that could be a good thing."

The clearing survivor's view: 'Don't panic, and have a plan B ready'

The clearing process is often something that prospective undergraduates learn about only after A-level results day does not go as planned.

But Kirsty Minnis, who is about to begin her third year of a mathematics degree at the University of Leicester, had done her research beforehand.

"Clearing was something I had to research off my own bat," she explains. "There is some really good information on the internet, but you have to know where to look."

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When Minnis went in to her school to get her results in August 2007, she found that she was short of the grades needed to get on to the courses she wanted at her first- and second-choice universities.

"I had a good cry," she says, "but then I calmed down and went and talked it through with my tutor."

Her school had not given Minnis much information about clearing, but she doesn't blame her teachers. Instead, she points the finger at the constant changes to the clearing system. "I think there is just a lack of understanding - it gets confusing if it's never the same process twice."

She also believes that there is a negative perception of clearing that doesn't reflect the facts. "There are some really good universities and solid courses - sometimes it's just been a bad year for applications."

Minnis emphasises the importance of not accepting a place merely for the sake of it.

"When I went through clearing, I made sure that I didn't compromise. I had an idea of where I wanted to be, and I made sure that I stuck to that."

Her advice for students facing the potentially daunting prospect of clearing this year is simple. "Don't panic, don't worry and do lots of research beforehand. There's no harm in having a Plan B."

sarah.cunnane@tsleducation.com

The recruiter's view: 'It's demoralising for students, but places will fill fast'

"If it continues the way it is going," says Lynn Grimes, director of marketing and recruitment at Thames Valley University, "clearing may well become obsolete."

Grimes claims that rising application numbers, combined with government caps on student numbers, may lead to courses being filled even before A-level results are released.

"It is contrary to government targets," she says. "How can they pledge to get 50 per cent of A-level students into higher education and then restrict numbers? I can see and appreciate the reasons for the cap, but it's especially demoralising to see widening participation initiatives leading to higher applications, only for those students to find they do not have a place."

Grimes says that clearing is a good system to have in place, although she feels that not enough is being done by either the Universities and Colleges Admissions Service or schools to highlight clearing as an option throughout sixth form.

"Students need to realise that clearing is not a last-chance saloon.

"We talk to students who are often upset and dazed at having to go through the process. If they were more aware of clearing as a concept before results day, it might not be such an upsetting time."

Thames Valley has a number of initiatives to raise awareness of clearing, including an application for the iPhone and a Twitter "clearing guru".

However, Grimes does not feel that these innovations will ease the pressure on her staff. "People still ring up and want a prospectus. They will always want that contact."

For now, she is focusing on getting her team prepared for an extremely busy clearing process.

"Usually we're talking to people throughout the clearing season. This year, however, we think we will have filled all our places in two to three weeks. It's going to be an interesting year."

sarah.cunnane@tsleducation.com

The A-level student's view: 'people need more time to research options'

Lewis Bateman, who will get his results today, is aware of the clearing and adjustment processes, having researched them after hearing the terms at an open day.

Others at his school in Leicester aren't so well informed, he says. "The school didn't give us any information about clearing. It could have done much more - there isn't even a guide on its website."

Like all those awaiting A-level results, Bateman recently received from the Universities and Colleges Admissions Service a letter explaining clearing. He feels that this is insufficient. "It should send a letter through at least a month before the results. Otherwise people will not have enough time to properly research their options in case they don't make their grades."

He believes that student complacency also plays its part in the lack of knowledge about clearing. "Some people feel invincible. They don't realise that because courses are so oversubscribed, missing a grade might mean missing out on a place."

Naive choices can result in applicants ending up in clearing, he says, adding that it would be helpful if students didn't rely so heavily on league tables to make choices.

Bateman may have to go through clearing or adjustment because he is no longer sure that he wants to take up his "firm" offer of a place and can't afford to go to his second choice.

He thinks the process may be tricky because it can take up to two weeks after results day to be released from one's firm choice. "By then," he says, "I might not be able to get a place on a course I want."

sarah.cunnane@tsleducation.com

The careers launch pad: universities go to great lengths to help graduates through the downturn

Universities are pulling out all the stops to help students and graduates get through the recession.

Many are helping their graduates to find internships, often supported with money from the ?30 million Economic Challenge Investment Fund (ECIF) announced in January. The Government has also launched a Graduate Talent Pool, a scheme to help students find willing employers.

At the University of Teesside, the ECIF is supporting a number of salaried internships, with employers obliged to pay only half the salary of a new graduate employee. The University of Worcester's scheme, meanwhile, is open to graduates of all universities and offers the chance of four days' paid employment a week plus a ?2,400 bursary to spend one day a week studying for a postgraduate certificate in applied business management.

Graduates who cannot find jobs are even being offered paid work by their own universities. At Aston University, the executive team decided to forgo salary increases this year and to put the money towards a scheme offering paid employment for graduates at the university for up to six weeks. Graduates will conduct special projects, including a review of the university's prospectuses.

Some institutions have launched campaigns with slogans such as "Yes You Can! (Find a Job in the Recession)" (London School of Economics); "Get Sorted" (Sheffield Hallam University) and the "Credit Crunch Challenge" (University of Bedfordshire).

Over the summer, most universities are offering free events such as courses, workshops and conferences that are designed to equip graduates with the right skills for job hunting in a recession.

A week-long entrepreneurship "boot camp" at University College London aims to teach its graduates the basics of starting a business, reading balance sheets and producing a business plan, while 30 students at the University of Wolverhampton will be given the opportunity to set up their own businesses while still at university and a chance to win financial backing of up to ?4,500.

For those who think further study may be the best option, many universities are offering generous bursaries or fee discounts to graduates who decide to stay on for postgraduate study. Universities report that the numbers applying for postgraduate courses has risen sharply.

The number of applications for masters degrees is up 20 per cent at University College London, 30 to 40 per cent at the University of Leicester and 100 per cent at the University of Lincoln.

The University of Sussex has launched Postgrad Plus, a scheme that provides its taught postgraduate students with additional employment-focused support and training, while the University of Surrey is working to incorporate professional training into every undergraduate course.

Unsurprisingly, careers services have found themselves inundated with inquiries. At the University of Northampton, Catherine Klime?, team leader in education and careers guidance, says: "As a response to the increased demand, we added additional time slots to our booked employment summer schedule. These have been full every week this far."

King's College London has even launched a "Job Club" that follows the model used by JobCentres. Graduates looking for jobs visit the careers service weekly for group sessions on CV writing and interview techniques.

Other universities are proactively searching for graduate vacancies. The LSE contacted every recent employer of its graduates by phone to see what other opportunities were available. It also put together a video promoting LSE's graduates featuring its alumni, including Shami Chakrabarti, director of the civil liberties group Liberty.

A campaign called Talent@MMU is encouraging businesses to inform Manchester Metropolitan University of any vacancies that arise. It also aims to raise awareness of the skills its graduates can offer.

A similar strategy at Thames Valley University has led to a 38 per cent increase over the past year in the number of jobs being advertised through the university's careers and employment service this summer.

Moreover, a growing number of universities now offer career support to their graduates for several years after they leave.

The Royal College of Music's Woodhouse Professional Development Centre offers services to all graduates for five years after they leave, as does Birmingham City University.

As a pilot project, The Open University is extending its email careers guidance service to all its alumni, rather than just recent graduates.

When it comes to job hunting, the message from university careers advisers is for graduates to be open-minded and to think laterally.

Jo Lozinska of Thames Valley's careers and employment service says: "We're surprised to find that students with part-time jobs in supermarkets, for example, very often haven't considered the diverse range of graduate-level roles that exist in these companies. So we tell them to find out - speak to people where you work and see what opportunities there might be to develop your career within the organisation."

Jacqui Gush, head of Bournemouth University's graduate employment service, agrees: "The advice is, take what is available and make the most of it."

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