Online errors delay student loans

The applications system has been overhauled this year

Thousands of students could be left without money at the beginning of the next term because of computer problems which have delayed loan payments.

Councils in England and Wales have asked the government for emergency funding to cover the shortfall.

A £30m centralised computer system introduced by the Student Loans Company has been beset by slow processing and crashes.

Until this year, local authorities had processed their own applications.

'Not tested properly'

Using the new software, councils process applications for loans and send the information online to the SLC to make a decision.

Councils have often been unable to log on and say the SLC has taken longer than normal to finalise loan details.

A Wandsworth Council spokesman told News Online that, under its old system, applications took around three weeks to go through.

At present, they are taking six to seven weeks, he added.

The 520,000 students who applied for loans by the 2 July deadline are unlikely to be affected by the delay.

But with 100,000 late applications expected to follow next week's A-level results, this could leave many students starting university without money.

Course fees, rent, travel, books, food and other necessities will have to be paid for.

Wandsworth is expecting 1,400 loan applications next week. Its lead councillor for education, Malcolm Grimston, said the system was "extremely slow and unreliable".

He added: "These problems result from the inadequate testing and rushed introduction of the new system and in the council's view, were clearly identifiable in advance."

Sir Sandy Bruce-Lockhart, chairman of the Local Government Association (LGA) and leader of Kent County Council, called on the government to provide contingency funding for students affected.

He said: "People have been aware for several months that the centralised system simply wasn't tested enough. It hasn't been working effectively."

Earlier this year, the LGA conducted a survey of local education authorities. Of those who responded, 96% said there had been "significant" problems with the software.

Sir Sandy added: "It was difficult for councils to do the work in time. The software kept crashing and was extremely slow.

"The government needs to make a statement to reassure everyone that contingency money is in place."

A Student Loans Company spokesman said no students who applied before the 2 July deadline would "lose out" and that the system was not in "meltdown".

He added: "Contingency plans, if they need to be invoked, will be only for a very few LEAs and are designed to make sure none of their students will suffer in any way."

The company's chief executive, Ralph Seymour, told Radio 4's Today programme there had been "teething problems" with the computer system, but said most late applications would take only "a week or two more" as a result.

Chris Grayling, the shadow minister for higher education, said: "Ministers have been well aware that the new system was in a state of chaos, but have done nothing about it.

"They need to make a clear, public statement now - instead of passing the buck - about how they will ensure that no student is left in poverty at the start of their time at university."

The Department for Education and Skills declined to comment.