Admissions staff this week attacked the Student Loans Company for asking every university and college to complete manually a list of all students who have loans.
The Department for Education and Employment wrote to all universities and colleges last week, asking them to complete the original paper forms sent by the company. A hard copy of electronic lists produced by institutions will not be acceptable.
The SLC said it required "a signed copy in a standard format with a unique barcode since this will allow us to carry out the rigorous quality checks which are essential prior to the payment of taxpayers' funds".
It is estimated that manual processing will take five times longer than electronic checking.
Liz Mears, assistant registrar at the University of Southampton, said: "When universities are constantly seeking to make the best use of IT, it is archaic for the SLC to ask for annotation of a printed list rather than an electronic report.
"This means some 6,000 entries will have to be extracted from our database, transcribed to the printed list and then re-input by the SLC to their database."
Roger Clark, academic registrar at the University of Reading, said: "It would be much more efficient to check students against electronic lists."
A registrar at a large university who did not wish to be identified said: "It is just beyond belief - the SLC wants us to return to the Dark Ages. There has been no consultation."
Institutions have been given an extra three weeks over the millennium to complete the forms. Staff were quick to point out that the extension actually amounted to just 11 working days, at a time when institutions would normally be closed. They also raised concerns that payment of the second instalment of loans would be delayed as a result.
The SLC said payment will not be delayed. A spokeswoman also said that the company had completed extensive millennium testing on its computer systems and did not anticipate any failure.
Admissions staff remain concerned that manual processing of the forms will introduce mistakes. "Despite everyone's best efforts, a small number of errors is almost inevitable. Potentially they could - literally - be costly to the students affected," said Ms Mears.
Staff also responded angrily to a letter from Baroness Blackstone, higher education minister, thanking them for their work in implementing the new loans system.
A University of Bradford admissions officer said: "I am embarrassed to circulate the letter from the baroness to colleagues because of the derision with which it will be greeted. Her claim that 'our commitment to get money to students at the start of term has largely been met' cannot be considered to be even the literal truth."