The full extent of delays to student loans and grants emerged yesterday as MPs called for an urgent parliamentary inquiry into the crisis.

According to data from a Freedom of Information request, delays to money from the Student Loans Company (SLC) have left up to 175,000 students without financial assistance. Many have had to pay for their first weeks of term with credit cards, borrowing from parents and income from temporary jobs, it was revealed.

The loans company has failed to cope with the 8 per cent rise in applications since last year. It is also struggling to cope in its first year administering maintenance grants, which it took over from local authorities. In a statement the company said that 87,346 more students had applied for finance this year.

Students say that helplines at the company, a quango that is overseen by Student Finance England, are constantly engaged. It blamed technical problems and a flurry of late applications but had given assurances that students who applied on time this year would get their money for the start of term.

Holly Neve, who applied before the deadline, told The Times: “I still haven’t got my student loan and I have been at university for two weeks. I’m running out of cash and my tuition fees are due soon.”

Phil Willis, the Liberal Democrat chairman of the Innovation, Universities and Skills Select Committee, said that what had happened was totally unacceptable. “It requires an urgent select committee inquiry to see what went wrong and whether the Student Loans Company has had its day,” he told The Times. “It worries me what students will resort to in order to pay their bills,” Mr Willis added. Many would be forced to take suspect jobs away from campus where they were open to exploitation, he said.

Universities have had to make emergency payments to students who would otherwise have used loans and grants to cover the cost of fees and rent.

Figures released to the BBC under the Freedom of Information Act show that 1,091,653 students applied for finance by October 4 and 916,295 applications had been dealt with. That leaves 16 per cent outstanding. Freshers were worst hit: 28 per cent of their applications had not been processed.

Wes Streeting, of the National Union of Students, said that “catastrophic mismanagement” had led to the problems. “Students have been failed at the very time they can least afford to be. We urge universities to continue to support the many students who are in dire financial need as a result of this crisis,” he said.

An academic has accused today’s students of living an “upper-middle class life” that they could ill afford. Kevin Sharpe, Professor of Renaissance Studies at Queen Mary, University of London, said that they built up debt by spending funds on smoked-salmon lunches and penthouse digs.

David Willetts, Shadow Universities and Skills Secretary, said that the crisis at the loans company led back to the Government. “Senior officials were present at all the meetings where problems were discussed, so ministers cannot duck their responsibility for this year’s problems.”

The Department for Skills said that David Lammy, the Minister for Higher Education, had “expressed his disappointment to the SLC over the reports of delays in students’ financial support.

“The SLC has apologised publicly for these problems and has assured the public and the minister that more than three quarters of a million students have now had their application for funds approved and others are being processed as swiftly as possible.”

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