Students Face Substantial Risk Of Loan Delays Reoccurring

Fri, 19 Mar 2010

The delays in the payment of student loans and grants that affected hundreds of thousands of students last year could is likely to occur again this year, a new report has revealed.

The report from the National Audit Office (NAO) on the failures of England’s student loan system warned that there is a "substantial" risk of last year’s fiasco being repeated.

It said the Student Loans Company (SLC), which is responsible for processing applications for student loans and grants, provided an "unacceptable" service last year and questioned whether it can cope with an expected 50 per cent increase in the number of student finance applications this year.

The student loans system hit crisis point last autumn after the SLC’s processing system collapsed, leaving hundreds of thousands of students across England without funds for the start of their higher education courses .

The NAO report said the government’s decision to give the SLC sole responsibility for processing loan and grant applications for the first time last year backfired as the firm "underestimated the significant risks in integrating the student finance service".

It found that only 46 per cent of all applications were fully processed by the start of the 2009/10 academic term, compared with 63 per cent the previous year, with the company taking 33 per cent longer to process an application than local authorities the previous year.

The failure of a new document scanning system, which was launched untested, also led to a dramatic increase in the number of telephone calls from students chasing up loan applications . However, most of these calls went unanswered.

Furthermore, half of students surveyed by the NAO said they had been asked to complete and send the same paperwork more than once, and 17 per cent said the SLC had lost some of their documents.

The report concluded: "Avoiding a recurrence of the 2009 problems is of the highest priority for 2010, but substantial risks remain to successful delivery of the service."

NAO chief Amyas Morse said: The question must be asked how the company, given its failure in 2009, will deal with twice as many applications in 2010, when it becomes responsible for applications from both first and second year students ."

"The Department for Business, Innovation and Skills and the company must give the highest priority to achieving a radical improvement in the service and, in so doing, to restoring the confidence of applicants and stakeholders.
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