Thousands of applicants are facing unemployment this summer because of a shortage of university places, says the vice chancellor of Swansea Metropolitan University.
Figures obtained by the Politics Show Wales reveal applications to some universities are up more than 30% while places funded by the assembly government remain roughly the same.
Prof David Warner said a considerable number would miss out and two Welsh universities said they will not offer places through clearing this year.
The assembly government said public funding was tight and it was in no-one's interest for universities to recruit beyond their capacity to sustain high quality provision.
On average the number of applications to Welsh universities is up 15% on last year.
Swansea Metropolitan University reports a 33% increase, while Glyndwr University in Wrexham says applications are up 31%.
Meanwhile, the number of places universities are able to offer with money from the assembly government remains about the same as last year.
It is estimated each student costs around £9,000 in grants and fees and the assembly government plans to impose a cap on university places from next year to control spending.
Universities have been asked not to recruit above agreed levels this summer and some institutions are already reducing their intake, with Bangor University taking on 17% fewer students this summer.
Prof Warner said it was a set of human tragedies waiting to happen.
"Surely there must be some politician who can think outside of the box and say paying a relatively small sum of money has got to be better than committing thousands of Welsh 18 year olds to the dole," he said.
He said applicants "have no idea" about the problems awaiting them should they try and get a university place through clearing.
Swansea Metropolitan and Aberystwyth universities told BBC Wales they do not intend to enter the clearing process this year for the first time.
With many courses already filled Bangor University, University of Wales Newport, Glamorgan University and UWIC said there will be fewer places offered through clearing than last year.
Liberal Democrat Education spokesperson Jenny Randerson accused the assembly government of "squeezing the number of places".
"It is ironical that in England they are expanding the number of places while we are at a standstill and in fact on a reduction here in Wales," she said.
A-level student Claire Thomas said she was worried about missing out.
She said: "Everyone is getting excited about going and you're working through the exams to go so it would be awful if we don't get to go."
Katie Dalton, President of National Union of Students Wales, urged those who miss out on a place to consider their options carefully.
"They can always come back the year after and actually that might be beneficial to some students who are able to go away and do some work experience, earn some money, especially the poorer students who might need to actually earn more money to save for going in to education."
A Welsh Assembly Government spokesperson said: "Institutions in Wales have amongst the highest student satisfaction ratings in the UK and it is in no one's interest if universities recruit beyond their capacity to sustain high quality provision."
The Politics Show is on BBC One Wales on Sunday from 1200 BST.