Student loans firm faces record level of complaints

Fourfold rise in grievances among borrowers

(Colin McPherson)

The number of students and graduates complaining about the handling of their loans has soared in recent years, amid growing concerns that the cost of higher education is fuelling discontent in universities across the country.

Figures obtained by The IoS reveal the number of borrowers who made complaints against the Student Loans Company (SLC) rose from 1,441 in 2005-06 to 5,648 in the year to this April. The 2010-11 total was more than double the 2,566 complaints of the previous year.

Grievances ranged from lengthy delays in the payment of loans to the "harassment" of graduates by debt-collection agencies hired to ensure that they kept up with repayments.

Details of the rising toll of complaints come a year after the SLC's boss was forced to resign after an organisational debacle that left thousands of students waiting months for loan and grant payments.

The company said last night that the most recent increase in complaints came after it took over processing many applications that had previously been handled by local councils.

But student leaders claimed the growing complaints demonstrated unease about the cost of higher education – as well as discontent about the way borrowers are treated. They also warned that the situation will deteriorate further as higher tuition fees force hundreds of thousands of students to rely more heavily on loans.

Aaron Porter, president of the National Union of Students, said: "The complaints demonstrate students' growing dissatisfaction with all parts of the higher education funding system. We will be keeping a close watch to ensure there are no repeats of debacles like the one in 2009."

An itemised account of grievances logged against the SLC, obtained under Freedom of Information legislation, shows that "collections disputes" accounted for more than a third of the 1,441 complaints five years ago. "Arrears and agency issues" was consistently among the highest single category of complaint in subsequent years. Sarah Teather, the education minister, has said that many of her constituents have complained that "the SLC has failed miserably to stop taking payments after the loan has been paid off".

The SLC was plunged into chaos in September 2009 after it failed to process 209,000 students' grants and loans – more than half of all applications – by the start of the university term.

Weeks after the coalition government was established, Ralph Seymour-Jackson, the company's chief executive, resigned after ministers made it clear they had no confidence in him.

An SLC spokeswoman said last night: "The Student Loans Company processed 967,000 applications last year, and the increase in complaints highlighted for 2010-11 represents an increase in customers who were previously assessed by local authorities."

Case study: Stephanie Babet, 21

Third-year student of creative writing at Liverpool John Moores University

"Last summer, while filling out my student loan forms, I did it online for the first time. It took me for ever as the website is so confusing. I clicked 'yes' when it asked if I needed to submit evidence – like a passport – thinking it would keep me on the safe side. I didn't think it would cause so many problems; how wrong was I?

"I ended up not getting the first instalment of my loan until November, because they were waiting for information that I had provided two years earlier.

"I found the Student Loans Company useless, and it wasn't until my mum sent a very harsh complaint that the problem was fixed. All in all, SLC caused me a lot of unnecessary stress and worry in my final year of university, and were not at all helpful whenever I tried to contact them. It annoyed me greatly that, at 21 and a final-year university student, it wasn't sorted out until my mum got involved."