The first post-Covid cohort of school leavers face a summer of uncertainty that “threatens to hold back a generation”, as students compete for fewer places on popular university courses.

After A-level grade inflation during the pandemic forced universities to take on more students, institutions are now retrenching in popular subjects despite a surge in applications.

Parents and teachers who contacted the Guardian report that students predicted to gain A* grades in their A-levels, who in previous years would receive offers from many of their preferred institutions, have instead received a string of rejections.

Stephen Morgan, the shadow schools minister, said: “This government’s repeated failure to plan for our children’s futures threatens to hold back a generation. Young people sitting exams this summer have endured two years of chaos and disruption to their education. Yet ministers’ complacency is leaving them with the additional worry that getting good grades won’t be enough to move on to the next stage of their lives.

“Last summer we urged ministers to work with universities, we set out a plan for this summer’s grades almost a year ago, but ministers have sat on their hands. Children’s aspirations are an afterthought for this government.”

University applications are up 5% this year, partly fuelled by higher numbers of 18-year-olds – a result of the mid-2000s baby boom, and part of a trend set to continue for the next decade – and those who delayed applying because of the pandemic.

But members of the Russell Group of research-intensive universities over-recruited in the last two years – as a result of students being given higher teacher-assessed grades – and they now want to bring numbers back to pre-pandemic levels.

University leaders blame the erosion of tuition fees by inflation for making it difficult for them to take on the rising numbers of school-leavers. To keep numbers at a manageable level, popular universities are making fewer offers, leading to disappointment for some candidates.

Daniel Merrett, 17, a student at a state school in Portsmouth who was on free school meals, has an A* in maths and is predicted A*A*A in further maths, physics and computer science. But he was rejected by his four top choices of Oxford, Imperial College, Warwick and Bath. He received the decisions very late in the cycle and has decided to reapply next year rather than take up his insurance offer from Liverpool.

“When I read ‘your offer’s been unsuccessful’, it was quite a big shock, I wasn’t prepared to see that response,” he said. “The first day was depressing, I didn’t feel great about it. You’ve just smashed one of your dreams. It made me feel my A* was less valuable than usual.”

Larissa Kennedy, the president of the National Union of Students UK, said: “This is absolutely appalling for students. What they called access was really a closed door, and this news has exposed the myth of this broken education system.”

Maija, a school teacher, said her year 13 students were dealing with “frustration and devastation” after several who were predicted top grades were rejected from all universities except their backup choice.

“In other years, students with equivalent achievements have been able to obtain their desired places. I find it absolutely illogical that a student with those achievements is considered as not good enough,” she said.

Maija said universities had increased their grade requirements this year, and some students had applied to “insurance” universities that had then raised their offers, for example to AAA instead of ABB, making them no longer a good back-up.

An email to schools from Warwick University said that “due to the uncertainty with the grading of A-levels and [the international baccalaureate]” it had increased its entry requirements to A*A*A.

One university leader said offers were “more cautious” after seeing higher predictions by teachers than expected. Students use predicted grades to make their initial applications, and usually receive offers conditional on achieving certain exam results.

Mark Corver, the founder of DataHE, said data last year showed high-tariff universities were tightening up recruitment after years of expansion. “We did speculate at the time that all the circumstances were in place for this to be not a one-off blip but a sea change in the ability of applicants to get into certain types of university.”

Mike Nicholson, the director of recruitment at the University of Cambridge, said many universities ended up with significantly more students than anticipated in 2020 and 2021. “So we’re seeing 2022 as a year a lot of universities are using to recalibrate. Universities are being quite conservative in the number of offers made so they don’t find themselves caught out.”

Nicholson said students were unlikely to be able to “trade up” in clearing as the most competitive courses and universities would be full. For students considering deferring, he said next year offer-making would probably still be lower.

However, fewer school-leavers in England are expected to defer or take a year out, after the government’s changes to the student loan system. Students starting courses in 2023 will make student loan repayments for 40 years after graduation, rather than 30 years for those admitted to courses this autumn.

A spokesperson for the Ucas university admissions service said: “We have seen in the last two years during the pandemic with the move from exams to teacher-assessed grades more students meet the conditions of their offer, especially in the most competitive courses such as law, engineering, medicine and dentistry.

“At the most competitive universities, the number of students accepted on to full-time undergraduate courses increased from 154,000 in 2019 to 177,000 in 2021.”

Ucas said the 5% increase in the number of UK 18-year-olds applying this year, from 306,200 to 320,420, along with 6,000 more students holding deferred entry places, “will make securing a place at many universities a highly competitive process”.

A Department for Education spokesperson said: “We want all pupils with the ability and talent to study at university to be able to do so, and last year a record number of students secured places at university, including a record number of 18-year-olds from disadvantaged backgrounds.

“Every year there is competition for places at the most popular universities and on the most popular courses, but government works closely with the higher education sector to ensure students are able to progress to high-quality courses that lead to good outcomes.”