Call to probe loans hold-up

October 15, 2004

A full investigation is needed into this year's student loan problems to prevent a repeat next year, according to a senior MP.

Norman Lamb, who sits on the influential Treasury Select Committee, said he was concerned that delays in the loans system were adding to the debt anxieties of students at the start of their university careers.

Mr Lamb, MP for North Norfolk, said that one first-year student from his constituency was told it would be Christmas before he received his full entitlement, despite applying for a loan before the deadline in July.

Mr Lamb has written to the head of operations at the Student Loans Company asking for an explanation and to Charles Clarke, the Education Secretary, asking for an assurance that lessons have been learnt from this year's problems.

The MP said: "At a time when a lot of families are anxious about money, this only adds to the anxiety."

Precisely how many students in the UK are still waiting for cash remains unclear.

However, the SLC gave an upbeat assessment this week of how the switch to a new online system for processing applications - called Protocol - had worked this year.

Under the new system, local authorities no longer process the loan applications they receive but forward them to the SLC electronically for a final decision.

Norfolk County Council, the local authority that receives applications from Mr Lamb's constituents, dealt with 9,0 cases and a further 1,483 were still being processed.

But a spokesman for the SLC said: "I think a measure of how things are going is that we paid more students on September 30 this year than last year."

The SLC added that there was likely to be less of a delay in processing late loan applications - received in August - than last year.

Students were receiving funds faster under the new system of direct payments to bank accounts rather than under the old method of issuing cheques, the SLC said.

"Across the board, the performance of local authorities has been very pleasing, bearing in mind the mountainous task," the spokesman added.

"But there have been those who have not come up to that level of performance, often because of things such as not being configured to the right internet server.

"The plain fact of the matter is that there isn't a meltdown."

Despite the reassurance, the National Union of Students warned that some students were struggling to secure bridging loans or emergency hardship funds while they were waiting for their loans.

Hannah Essex, NUS vice-president for education, said: "We have been assured that every student who applied on time will receive their student support or a contingency payment to keep them going while their application is processed. We are disappointed that even these contingency payments have been delayed.

"We have been advising our members about the options available, such as bridging loans from the Access to Learning Funds or national equivalents, but we are concerned that some of them have been denied such payments, leaving them in dire financial straits.

"Student unions have also been lobbying for institutions to be flexible about tuition fees and rent payments."


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