Students' loan cash put on fast track

LOCAL AUTHORITIES have been told they can bypass controversial means tests to avert a start-of-term crisis over student loans. They will be able to rush through emergency payments to make sure students do not face the start of term without money for food and rent.

Universities, which also depend on council means tests to calculate tuition fees, are being asked to delay their bills to any students affected by administrative problems until essential paperwork has been completed.

Councils are facing major delays in implementing the new income assessments at the heart of the Government's reform of student finance, which comes into force in full for the first time this year.

They warned last month that hundreds of thousands of students could face a penniless start to the university year this autumn because of problems with computer systems designed to calculate parents' incomes. Means tests to calculate the income of students' parents are crucial to the system as they determine how much each student must pay in tuition fees and how much they can borrow in student loans to cover living expenses.

A failure in the means test system would cause particular problems this year because for the first time there will be no grants to act as a safety net for the 350,000 students who will start at university in October.

Under the new "fast-track" system councils which fail to meet the 18 August deadline for completing means tests can authorise the Student Loan Company to pay out three quarters of the student loan - the minimum entitlement for all students - at the start of term. The rest of the loans, up to a total of pounds 3,635 depending on parents' incomes will be paid out when the means test has been completed.

Guidelines sent to councils said that the non-means tested loans should apply to "late applicants and any other students for whom local education authorities judge that the financial assessment will not be done in time to ensure that the student gets a cheque at the start of term".

Andrew Pakes, the National Union of Students president, said: "This is a consequence of a young and rather ill thought out system, but the Government and the Student Loans Company have taken a responsible attitude. There's no reason why students should be left without money on the first day of term."

A spokeswoman for the Local Government Association said: "The fast track system means they can get some money. But awards officers would rather get the means testing right rather than do half the process now and half later." Sarah Hall, of Westminster Council, said the fast track system would lead to a better deal for students than in previous years.

A spokeswoman for the Department for Education and Employment, insisted that the system would work as planned. "Students will get their first cheque in time for the start of term," she said. "The vast majority of local education authorities are on course to complete means testing on time."