Warning over student loan changes

About 100,000 students in England are waiting for loans to be processed

Students in Wales could face similar problems over loan payments as in England if processing of loans is centralised, it has been claimed.

Loans and grants in Wales are processed by local authorities, but an internal review has revealed an option to set up a single call centre to do the work.

The Welsh Assembly Government says no decision has been taken and it is consulting.

But staff who deliver the service said the proposals would reduce quality.

More than 100,000 students in England are still waiting for their loan applications to be processed.

The internal assembly government review, released under the Freedom of Information Act, says there is a "compelling case for change".

It recommends creating a new "centre of excellence", possibly in Colwyn Bay, Conwy county, where the Student Loans Company (SLC) has a base.

The SLC handles the payments of student loans, while assessments are carried out by about 110 staff in local authorities.

We feel that the Student Loans Company are not robust enough to be able to deal with the weight of inquiries and business that this would bring their way Gillian Jack, University of Glamorgan

Under the proposals, staff would move to north Wales and the workforce would be reduced to between 40 and 50.

The review says that because of the changes in England, continuing with the current system would cost an extra £2m a year.

Dr Gillian Jack, head of student services at the University of Glamorgan, said universities were not backing the changes.

"We feel that the Student Loans Company are not robust enough to be able to deal with the weight of inquiries and business that this would bring their way and indeed the recent experience in England has proven this to be the case," she said.

Dominic MacAskill from Unison, which represents some local authority staff, said the existing service had high satisfaction ratings.

"Replace that with a call centre where people are numbers rather than individuals then I can't see the service improving. It can only decrease in its quality," he said.

'Effective and efficient'

But Wes Streeting, president of the National Union of Students, said students did not care who processed the applications as long as their grants and loans were paid on time.

"What we've seen in England as a result of the catastrophic failure of the Student Loans Company management is hundreds of thousands of students affected by late payment, lost documentation and a really miserable start to their first term at university," he said.

"There are certainly massive benefits to removing the processing of student loans from local authorities to a national scale on a centralised system (and) if this is something that Wales is looking at hopefully they can have a good look at the Student Loans Company and the way it's affected England."

The new service will not start to process applications until 2013.

Education Minister Jane Hutt announced in September that a group would be set up to look at the reform options.

An assembly government spokesperson said: "Given pressures on public funding and the desire for a more effective and efficient student finance arrangements we are working in partnership with the Welsh Local Government Association and local authorities to consider whether this would be a suitable option for students in Wales."

Local authorities are formulating a counter-proposal, which would increase the role of the existing call centre while protecting most local authority jobs.