David Willetts

New figures from the Student Loans Company show that 176,000 students have still not received maintenance payments, more than a month after their courses started, following the collapse in the student finance system this year. Shadow Higher Education Minister, John Hayes, has still not received a response to his letter to David Lammy asking about the remit and timescale for the independent investigation into this year’s problems.

Shadow Universities and Skills Secretary, David Willetts said:

“More than a month into the new university term, thousands of students are experiencing real hardship because of the Government’s mismanagement. Ministers have failed to deliver the improved service they promised, failed to recognise the scale of the problem, and failed to help students struggling to stay afloat.

“There is worrying evidence that disabled students and those from poorer households have been among the hardest hit. It is vital that the Government stops dithering and gets a grip on the system before the next group of students start in January.”

Notes to Editors

Figures released by the Student Loans Company today show that as of 1 November 2009, 119,000 approved applicants had still not been paid maintenance payments. A further 23,000 applications were still being processed, and 34,000 more had been asked for further information, although often this information will already have been provided by the student. http://www.slc.co.uk/statistics/facts%20and%20%20figures/index.html

This comes weeks after the chief executive of the SLC, Ralph Seymour-Jackson, claimed that ‘We are only dealing with 50,000 [delayed applications]’. In September, Seymour-Jackson pledged: “students … worry they won’t get their money on time, but they will”.

The student loans system has been beset by problems ever since the Government launched its new integrated student funding service this year. Announcing reforms to the student loans system, Higher Education Minister Bill Rammell pledged that the new system would mean ‘Clearer information, faster decisions, timely payments and accurate repayments.’ He said: ‘I want students to understand that they don’t have to worry about how they will pay their fees and living costs…The student finance service needs to be as simple and accessible as possible to students, parents and graduates.’ (DCSF press release, 3 July 2006). But the new system has collapsed in its first year of operation, leaving thousands of students dependent on emergency loans from their universities and struggling to stay afloat.

Freedom of Information requests have revealed that the Government knew about serious problems in the student loans system more than a year ago, but Ministers failed to address them. In July 2008, the SLC’s Board was warned that 40 per cent of phone calls from students would go unanswered and that there were three times as many emails being received as it was possible to deal with. They were subsequently told that a lack of call centre capacity meant 250,000 phone calls had gone unanswered in just three months. But despite these problems, in November 2008 the SLC adopted an official ‘avoidable contact’ policy, cutting the amount of time staff spent on the phone to students in order to cut costs. In January 2009, a senior official the universities department was warned about the high number of phone calls going unanswered but instructed the SLC to cut costs further.

http://www.slc.co.uk/pdf/Operational%20Delivery%20Board%20Minutes%20-%2015th%20July%202008.pdf;

http://www.slc.co.uk/pdf/FOI%20Main%20Board%20Minutes%20-%2025th%20November%202008%20(KBP).pdf and

http://www.slc.co.uk/pdf/A.3%20FOI%20Main%20Board%20Minutes%20-%2027th%20January%202009%20(JG).pdf

SLC Deputy Chief Executive Derek Ross has compared the crisis in the loans system to lost car keys. Ross said that some students’ documents had been ‘temporarily mislaid’ but claimed: ‘It’s a bit like losing your car keys - you think you have lost them, but they are in the house somewhere’ (The Guardian, 13 October 2009).

Last year, the SLC switched its helpline from an 0800 to an 0845 number. Each call costs up to 40p per minute from a mobile phone, and students reportedly have faced high phone bills even when their calls to the SLC have gone unanswered. 0845 numbers are commonly used for ‘revenue sharing’ - money from the call can be paid to the recipient so they can cover their costs or even make a profit. Government guidance explicitly recommends that public bodies should not use such numbers: “Ofcom continues to recommend that public bodies should not use NTS numbers exclusively (ie: without giving equal prominence to a geographic alternative) especially when dealing with people on low incomes or other vulnerable groups.”

http://www.ofcom.org.uk/media/news/2006/04/nr_20060419

David Willetts MP called a parliamentary debate on the student loan crisis on 14 October 2009. The full Hansard transcript is at

http://www.publications.parliament.uk/pa/cm200809/cmhansrd/cm091014/debtext/91014-0008.htm#09101435002341

John Hayes MP wrote to David Lammy at the end of October to clarify the remit and timescale of the inquiry. He is yet to receive a response.