Thousands of students left without support

As many as 100,000 undergraduates were left with no financial support from the Student Loans Company (SLC) at the start of the autumn university term, it has emerged.

The figures, which follow last year's fiasco when thousands of students had to wait months for payments, must place a question mark over the company's ability to deliver payments in future, MPs warned.

They emerge in a report by the highly influential Commons public accounts committee. Margaret Hodge, the Labour MP who chairs it, described them as "disappointing". She added: "There must be a steep change in the performance of the SLC if students are to receive the efficient effective value-for-money services to which they are entitled."

The report describes last year – the first year the company took over responsibility from local authorities for handling student loans – as "chaotic". In all, 132,000 undergraduates did not have an interim payment by the start of term. Many, particularly disabled students, had to wait months before payments came through.

The report acknowledges this year's performance was an improvement but adds: "We expected better. A quarter of applications were not sufficiently processed for students to receive even an interim payment by the start of the first term – which was only a limited improvement on the 34 per cent of applications unprocessed in 2009. Uncertainties remain over the company's ability to deliver and maintain a service that provides value for money."

The report blames officials from the Department for Business, Innovation and Skills for failing to take swifter action to remedy the crisis – and expresses surprise tougher disciplinary action was not taken.

"We are disappointed and concerned that responsible officials appear not to have been held to proper account for their failures," it adds.

However, the SLC said last night that 99 per cent of students who had applied by the end of June with the right documentation had received payments by the start of term.

Ed lester, its interim chief executive, said: "The SLC provided a much better service for our student customers in 2010."

Universities Secretary David Willetts added: "We will continue to work closely with the SLC to ensure students and their families get the service they rightly deserve."