A study by the Further Education Funding Council is highly critical of colleges' efforts to keep track of students' destinations.
Most fail to "exploit the wealth of data available to them", says the report. Only a small minority analyse the information and fewer use findings to improve future courses.
The FEFC survey looked at how 56 colleges collected, collated and presented details of full-time students' destinations. Some colleges managed to keep track of nine out 10 leavers while others knew what happened to fewer than half.
More than half had no data on students who dropped out. Few colleges even scrutinised the progression of those who stayed with them after finishing a course.
Most had no systematic, centralised system to record destinations information, the inspectors found. Although data is being collected informally, it is rarely recorded and collated centrally.
The task is made harder because few colleges have developed clear definitions of the various routes taken by departing students to allow them to classify the data.
The report finds managers fail to consider patterns emerging from the destinations information they do pick up. As a result, they are unable to tailor courses better for future students.
Changes to the Individual Student Record, the system colleges use to pass on enrolment details to the FEFC, mean both intended and actual destinations will soon be included for both full and part-time students.
The FEFC is now calling on colleges to improve the quantity and quality of information they provide.