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England's student loans and grants system is at "substantial" risk of being hit by delays again this year, a damning report has warned.
The beleaguered Student Loans Company (SLC) is expected to deal with twice as many applications this year, but there is no proof it can deal with demand, according to the National Audit Office (NAO).
Tens of thousands of students faced delays to their grants and loans payments last autumn after the SLC struggled to keep up.
The NAO's report on the fiasco found less than half of applications (46%) were fully processed by the start of the academic term last year, compared to 63% in 2008. Applications had been arriving more quickly than the SLC was able to process them, and by September 6 there were 241,000 that were not fully processed.
With the start of term approaching, the report found, calls from students chasing their applications soared, with four million made to the SLC last September. Despite having a target of no more than 14% of calls being abandoned, a massive 87% were left unanswered in this month.
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Between February 2009 and January this year, only a fifth (21%) of calls were answered in 60 seconds, and more than half (56%) were unanswered. The findings showed the SLC took 33% longer to process an application in the 2009/10 academic year, than it had taken local authorities in 2008/9. On average, it took 12.4 weeks for an application to be processed in 2009/10, compared to 9.3 weeks in 2008/09.
The SLC took over processing applications by new students from local authorities for the first time in 2009, for the academic year 2009/10. But the report was critical of both the SLC and the Department for Business, Innovation and Skills (BIS), saying they had underestimated the challenges of centralising the service. This year, the SLC will handle applications from students starting university this autumn, as well as continuing to deal with applications from students who started last year.
The report concludes: "The company expects to process at least twice as many applications in 2010, when it becomes responsible for applications from both first and second years, and it is unproven whether it has the capacity to provide a good service this year."
A spokeswoman for the Department of Business, Innovation and Skills said: "We welcome this report which provides further background to the processing issues at the Student Loans Company (SLC) last summer. As soon as the department became aware of the problems, both ministers and officials acted immediately including making more resources available.
"Last year we commissioned Professor Sir Deian Hopkin to carry out an independent review of the lessons learned and the SLC and the Department fully accepted the recommendations in the report and are implementing them."
