§ Earl Russellasked Her Majesty's Government:
What is the average delay in the payment of student loans, whether there are any plans to improve this figure, and whether the Student Loans Company has given efficiency priority over effectiveness.
Lord LucasIn its recently published annual report, the Student Loans Company reported that, in the academic year 1993–94, it had paid 91 per cent. of loans within 21 days of receipt of the application.
For the academic year 1994–95 my right honourable friend the Secretary of State for Education has set a target of payment of 92 per cent. of loans within 21 days. The Student Loans Company estimates its performance as at 30 November at 88 per cent. As at the same date the company had issued over 180,000 loans for the academic year 1994–95, as compared with 120,000 at the same time last year. Over 111,000 have been paid to existing borrowers, and over 69,000 to new borrowers.
104WAThe company has been experiencing difficulties associated with the introduction of a new repeat application procedure intended to increase efficiency and effectiveness. Forms were sent in May 1994 to existing borrowers to enable those who wished to take out another loan this academic year to make a simplified application before the start of term. Out of 320,000 students eligible for this procedure, only 60,000 returned their forms during the summer. The company made arrangements to process the large volume of outstanding applications which they expected to arrive when the academic year began. Plans were also made to deal with students who had lost or misplaced the simplified application forms.
In the event, many more students had lost or misplaced their forms than anticipated. Many telephoned the company for replacement forms, exceeding the normal call handling capacity. The company accelerated the normal programme of recruitment of temporary staff, moved staff from other areas of activity, doubled the telephone answering capacity, extended the hours of business into the evening and weekends, and gave priority to loans processing.
The company has written to all higher education institutions (HEIs) to apologise to all students, their parents and HEIs for the inconvenience caused. It has explained how the difficulties arose, and has informed them that the backlog should be cleared by Christmas.
The company's letter also explains how it proposes to prevent a recurrence of these difficulties in the future. I am sending a copy to the noble Earl and I have placed a copy in the Library.