England's student loans and grants system is at "substantial" risk of being hit by delays again this year, a damning report found today.
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.
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.
A survey of 1,000 first-year students conducted by the NAO found more than half (51%) were asked to send the same documents more than once; half (50%) waited over three weeks for a proper reply to a written question; three in ten (31%) had to ring more than five times before speaking to someone and around one in six (17%) were told by the SLC that their documents had been lost.
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."
It adds: "Avoiding a recurrence of the 2009 problems is of the highest priority for 2010, but substantial risks remain to successful delivery of the service."
BIS comes under fire from the NAO for failing to monitor the SLC properly, saying that "weaknesses" in the SLC identified in 2006, should have "served as a warning of the risks attached to such a challenging programme".
The NAO concludes the service did not provide value for money.
Mr Amyas Morse, head of the National Audit Office, said: "The question must be asked how the company, given its failure in 2009, will deal with twice as many applications in 2010, when it becomes responsible for applications from both first and second year students. The department and the company must give the highest priority to achieving a radical improvement in the service and, in so doing, to restoring the confidence of applicants and stakeholders. They will have to manage substantial risks."
Two top SLC officials, ICT director Wallace Gray and marketing and customer services director Martin Herbert, quit in December.
The resignations came after Professor Deian Hopkin's review of the problems said there had been a "conspicuous failure in key areas" which had had a "far-reaching impact" on students.
SLC chief executive Ralph Seymour-Jackson, said: "We deeply regret the problems that students experienced last year. This was the first year of a three-year process to centralise student finance in England and I would like to reassure students and parents that lessons have been learned."
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."
Mr Seymour-Jackson said on BBC Radio 4's Today programme: "I am really sorry for the problems and delays and difficulty people... had in getting through to us last summer.
"We didn't give them the service they have every right to expect.
"Lessons have been learned. We've put right the problems of the past and we will make sure they get the right service this summer."
He said there had been problems with the scanning system but this has been "completely rebuilt". The SLC will also hire 200 extra staff at peak times to take calls from students.
He added: "I can say if the student gets me their application with all the evidence by the key deadline of the end of June, I will make sure they have their money by the start of term when they register at university."
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