There is a "substantial" risk that England's student loans and grants system will be delayed again this year, according to the National Audit Office (NAO).
The government watchdog said in a report that last year's service from the Student Loans Company (SLC) was "unacceptable", and questioned how the company would cope with double the number of applications for student finance this year.
Thousands of students were left without their tuition fee loans and maintenance grants last year, after a government drive to centralise the service as a long-term cost-saving measure.
The responsibility for processing of applications for student grants and loans was transferred from local authorities to the SLC.
But, according to the NAO's report, the company underestimated the scale of the task it was taking on, and failed to prepare adequately.
A new, untested document scanning system failed to work, leading to four million phone calls just in the month of September. 87 per cent of these calls went unanswered.
Higher education minister David Lammy said that the firm would receive an extra £16m to improve its service before the coming academic year.
