INDEPENDENT experts will lead a review into why thousands of students have been left waiting for grants and loans administered by a company in the North-East – a week after most courses started.

MPs were told yesterday that of the record 1,091,653 applications for student finance made to the Student Loans Company by October 4, 916,295, or 84 per cent, have been processed – leaving 175,358 still outstanding.

The company, which employs more than 500 people at Lingfield Point, Darlington, administers Governmentfunded loans and grants to students throughout the UK.

Last night, it apologised to the students affected and their families.

The Conservatives described the situation as a “shambles” and demanded ministers take responsibility for a system they introduced.

Higher Education Minister David Lammy agreed the situation was “unacceptable and falls short of what the public can expect”.

As an example of its failings, MPs heard students were told to send applications to Darlington, only for them to be transported by lorry to its other site in Glasgow for processing.

However, due to a problem with scanners, the forms had to be returned to County Durham unprocessed.

A helpline and email assistance systems had also experienced problems.

As a result, Mr Lammy said former London South Bank University vice-chancellor Sir Deian Hopkin and Bernadette Kenny, of HM Revenue and Customs, would now investigate the situation. The Student Loans Company has already announced an internal review, but Mr Lammy said external expertise would provide “a frank assessment of what went wrong”.

“There needs to be a thorough look and, to that end, I have invited Professor Deian Hopkin, the former vice-chancellor of London South Bank University, and Bernadette Kenny, of the HMRC, to bring external scrutiny, expertise and challenge to the company’s review of lessons learnt from this year and the company’s preparedness to meet the challenges of next year,”

he said. “The SLC itself is on record acknowledging the need for such an exercise, but I am determined the process should involve external challenge and expertise needed to provide a frank assessment of what went wrong and a series of thorough proposals for the future.”

Shadow Higher Education Minister David Willetts said there was “widespread and deep concern” about the financial uncertainty for students caused by the new system of loan applications.

Mr Willetts said the Tories had called a debate on the issue at the “first opportunity”, adding: “It is a shambles and it is causing enormous distress to many students.

“Ministers have been trying to avoid responsibility for this by hiding behind the Student Loans Company.”

A spokesman for Newcastle University said: “We do not seek payment for accommodation until the end of October.

To that extent, the delays in the payment of loans and grants is not an issue. However, we have seen a noticeable increase in the number of students seeking emergency hardship loans, although the actual numbers are small.”

Tim Ngwena, president of York Students Union, said: “We will know the true scale of the problem by the end of the week.

“A lot of students rely on the funds they receive from the Student Loans Company, especially in their first term.

It is important that this sort of delay doesn’t happen in the future.”

The Student Loans Company is reassuring applicants that it is working to get students their money and apologises to those who have experienced difficulties.

Ralph Seymour-Jackson, chief executive of the Student Loans Company, said: “We are very sorry that students have experienced difficulties with their funding this year and for the worry that this has caused.

“We welcome the independent inquiry that has been announced to ensure that next year we can deliver.

“We are working flat out to process all valid applications.”

Students can check the progress of their application by going to direct.gov.uk/studentfinance