It will also look at how universities compete for students.
The Office of Fair Trading (OFT) said that recent government reforms in England have aimed to create competition between institutions and given students more choice.
It has launched a call for information on undergraduate higher education in England to look into the issue saying it is particularly interested in finding out about how universities compete, students' experiences of the current system and the impact regulation has had on institutions.
The watchdog said it wants to understand whether universities are able to compete effectively and meet the expectations of their undergraduates, as well as finding out whether students are able to access the right information to make informed choices about where and what they study.
OFT chief executive Clive Maxwell said: "'Universities in England enjoy an enviable reputation across the world.
"We want to ensure that choice and competition between universities play a positive role in underpinning their success in future, and encourage students, universities, employers and others to respond to our call for information.'
Nicola Dandridge, chief executive of Universities UK, said: "The higher education system in England has undergone major changes over the last few years, so it is understandable that the OFT might wish to gather information on how the system is functioning and whether it is working in the interests of students, as intended.
"The university sector in England will look forward to feeding into this project."
Toni Pearce, president of the National Union of Students, said: "NUS very much welcomes this call for information from the OFT. There is plenty of regulatory confusion within the higher education sector and, at this point in time, it would be useful to have an external view on what is working well, and in the best interests of students, and what may need some reform."