Page last updated at 16:17 GMT, Wednesday, 14 October 2009 17:17 UK

Troubleshooters lead loan review

student in library
Record numbers applied to UK universities this year

The government has appointed two troubleshooters to lead a review of student loans problems, which have left tens of thousands waiting for funds.

Higher Education Minister David Lammy told MPs he was sorry students and their families had been worried and frustrated by poor customer service.

Two independent experts have been appointed to head an internal review into the problems in loan applications.

The Tories say it is a shambles causing "enormous distress to many students".

They tabled a debate in the Commons on the issue, after delays in the processing of loan applications left tens of thousands of students without their full loans and grants at the start of the university term.

'Gone wrong'

The independent experts are former London South Bank University vice-chancellor Sir Deian Hopkin and Bernadette Kenny of HM Revenue and Customs.

Mr Lammy said the loans problems had "had a profoundly regrettable effect on individual students and their families".

The body responsible for organising the loans - the publicly funded Student Loan Company - had "fallen short of public expectation" and had announced an internal review, he said.

However, external expertise would allow lessons to be learned, he said.

"The SLC itself is on record acknowledging the need for such an exercise, but I am determined the process should involve external challenge and expertise needed to provide a frank assessment of what went wrong and a series of thorough proposals for the future," said Mr Lammy.

Something has gone wrong in relation to the Student Loans Company
David Lammy, Higher Education Minister

Until now the government had been playing down talk of problems.

Mr Lammy told MPs Labour's commitment to higher education was one of the nation's "great success stories", but added: "We do not pretend that nothing ever goes wrong.

"Something has gone wrong in relation to the Student Loans Company," he said.

Shadow higher education minister David Willetts said there was "widespread and deep concern" about the financial uncertainty for students caused by the new system of loan applications.

This is the first year that students in England have had to apply directly to the SLC instead of going through their local councils.

Ministers have been trying to avoid responsibility for this by hiding behind the Student Loans Company
David Willetts, Conservatives

This applies only to first year students and it is they who have been most affected by the problems.

Mr Willetts said the Tories had called a debate on the issue at the "first opportunity" once MPs returned to Westminster.

"It is a shambles and it is causing enormous distress to many students," he said.

"Ministers have been trying to avoid responsibility for this by hiding behind the Student Loans Company."

He said MPs had been hearing from many constituents - students and their families - who were experiencing problems and facing hardship.

Students' complaints

The SLC maintains it has dealt with more applications than it had at this time last year, but has apologised for the difficulties people have had in getting through on help lines.

Updating figures on students waiting to have funding approved, David Lammy said 77,000 applications were still "in processing" and 71,200 were not eligible or had been withdrawn.

The SLC has pledged that all students who applied "on time" will have received all their loans and grants by the end of October.

BBC News has received hundreds of emails from students and their families.

Some complain that the SLC has lost their documents and are now treating them as late applicants.

Others complained about the money they had to spend calling the SLC help line - because the main line advertised was an 0845 number - a matter raised in the Commons by the Conservatives.

'Lost keys' comments

For the Liberal Democrats, Stephen Williams said it was "absolutely vital" that lessons were learned so there was no repeat of these problems next year.

He added: "We know universities are able to be flexible over hall fees but what about the students who are having to pay private landlords? What about the students who are having to pay rental deposits?

"I am particularly concerned about the non-traditional students who have accessed university for the first time."

He said such students were the most likely to drop out because of financial worries.

Mr Williams also attacked comments by Derek Ross, deputy chief executive of the SLC, who compared the loss of students' documentation to losing a set of car keys.

The comments should be withdrawn and he should apologise, Mr Williams said.

National Union of Students President Wes Streeting said he was "relieved" the two independent figures had been appointed to the review.

"I hope this review will lead to a full and frank analysis of this shambles and that the management of the SLC will be held to account for a fiasco that has left hundreds of thousands affected by late payments, lost documentation and a miserable start to their first term at university," he said.

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