Students left penniless by loan system ‘meltdown’

A document scanning “meltdown” at the Student Loans Company meant finance applications went unprocessed and students were left entirely out of pocket, according to a damning report.

The “abysmal” failings were today slated by the National Audit Office. In its ‘Delivery of student finance report’, the NAO said students were not informed when they would receive their loans or grants, contact centre staff were unable to find the data to answer queries, and ninety percent of calls were unanswered at peak periods.

A new document scanning system was introduced without full testing, and then failed to work, the NAO noted. This led to serious delays in processing applications. Fewer than half of students’ applications were processed by the start of term, and other students are still awaiting finance.

As a result of delays to their money, many students across the country have had to ask their universities for temporary funds to cover their fees and living costs, or face dropping out of their degree courses. A backlog of a quarter of a million cases had built up by September last year.

Richard Bacon MP, a member of the Committee of Public Accounts, which will hold parliamentary hearings on the findings, described the extent of the problem as “quite extraordinary”.

The Student Loans Company today apologised for the problems. Ralph Seymour-Jackson, chief executive, told BBC Radio 4’s Today programme: “Lessons have been learned. We've put right the problems of the past and we will make sure [students] get the right service this summer."

He insisted that if students provide full applications including additional evidence by the deadline at the end of June, “I will make sure they have their money by the start of term, when they register at university".

Auditors PricewaterhouseCoopers will now carry out an independent assessment of the Student Loans Company, in order to assess whether it will be ready to process this year’s applications.

Copyright © 2010 IDG Communications, Inc.

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