Page last updated at 15:36 GMT, Monday, 12 October 2009 16:36 UK

Student loan firm explains delays

By Hannah Richardson
BBC News education reporter

campus scene
Students are now registering for their courses - often without funding

An internal inquiry into problems with the administration of this year's student loans and grants is to be held by the Student Loans Company (SLC).

Deputy chief executive Derek Ross announced the move as up to 116,000 applications remained in processing.

He apologised, saying the number of phone calls expected had been underestimated and that many documents were temporarily lost in the system.

But the SLC said delays to processing were no worse than in previous years.

He also claimed many of the outstanding applications had been received in recent weeks.

Nonetheless, Mr Ross said there had been a "real problem" with the scanning of documents.

941,000 applications approved
44,000 cancelled, withdrawn or ineligible
33,000 incomplete/paperwork missing
83,000 in processing

A new system had been introduced which required sensitive paperwork, such as proof of parents' income, to be sent from Darlington to Glasgow where they would be scanned in electronically.

But there had been problems with the scanning equipment and so the documents had then to be returned to Darlington, where the information could be processed manually.

Mr Ross said that although very few documents were lost permanently, many were temporarily mislaid.

"It then became easier to say to students could you send them [the documents] in again because they became lost in the system.

"It's a bit like losing your car keys - you think you have lost them - but they are in the house somewhere," he added.

'Improve communications'

He also said changes ministers made in October to the means-testing levels for maintenance grants had also delayed preparatory work for a new system by up to four-and-a-half months.

This is the first year that first-time applicants in England have had to apply directly to Student Finance England for loans and grants instead of to their local authorities.

Entitlement to payment is assessed by other authorities in Wales, Northern Ireland and Scotland, but payments are made by the SLC.

Mr Ross also said the SLC needed to improve its communications with students so that they better understood the system and when they could expect to get their money.

He added: "We are not saying there is nobody with a problem, we are not saying there's nothing lost but we are saying the bulk of processing is absolutely normal."

The SLC said that as of October 8, 83,000 applications were still in processing.

A further 33,000 applications were deemed incomplete - including those where documentation was missing possibly mislaid.

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