Remember, 缺 means to be short of, to have something missing. In this case, the students are short of certain characteristics that would enable them to face society. In Oz, we don't see this as a character defect. We would say: due to the lack of the right education or training, most students are unable to face the harsh realities of society. In Mainland China they still think that if you don't follow the norm as given by the ruling party, then you have a character defect. In Oz we don't think like that.

性格缺陷 might be independet or not strong enough to face the competition in the society in this context in fact, I don't think every one has a perfect personality, so in this sense, everyone would have some 性格缺陷.

it describes the negative sides of someone's personality/characteristics.

even it sounds strange in ————Eliot answered———— but, i absulutely agree, it is the fact in China.

like that: somebody doesn't has a good character 很多大学生have a bad character.