By STACEY BODGER
A huge backlog in the processing of this year's student loans was caused by the Department of Work and Income ignoring advice from institutions experienced at processing the loans.
An independent report, commissioned by Social Services Minister Steve Maharey, calls for the scrapping of the department's problematic 0800 call centre and a return to on-campus staff.
Up to 40,000 students were affected by delays in processing student loans earlier this year.
Around 22,000 received letters with incorrect details and many faced mounting bills for rent, food and course materials, while tertiary institutions suffered cashflow problems.
Mr Maharey said yesterday he could not guarantee a trouble-free system next year, but major problems should be avoided because many students were now registered in the department's system.
He said chief executive Christine Rankin and State Services Commissioner Michael Wintringham must heed the report's prescription for change.
But students say they still have no faith in the department and will "again prepare for the worst" with next year's loan applications.
The $27,000 report, by Wellington consultants Karen Erenstrom Associates, said the department ignored advice from students' groups and institutions which previously administered part of the system. Instead, it took an "our way" approach.
The report also found that the department had "severely underestimated" the demand on its 0800 phone line and, in January, had to boost the number of call-centre staff from 70 to 120.
"Problems tended to snowball, with the system going into a vicious downward spiral during the main enrolment period."
The report recommended the department:
develop a more effective on-campus service for inquiries, to reduce errors and lower demand on its call centre
return to on-campus loans applications, to be processed at the national centre
improve external relationships with institutions and students
review its operational policy.
But third-year Auckland University science student Stuart Rogers said he doubted whether the department could regain students' confidence.
Mr Rogers said it had lost his loan application three times, meaning he struggled for board, food and fares.
"The general consensus is that [it] is still supremely incompetent.
"It's going to take a very smooth loan process next year to change our minds."
Second-year arts student Natasha Thompson said that, despite the recommendations, she would be "again preparing for the worst" when applying for next year's loan.
Sam Huggard, co-president of the New Zealand University Students Association, said on-campus departmental staff needed to have access to a central database if the system were to improve.
Christine Rankin would not comment on the report yesterday but the general manager of specialist services, Patricia Reade, said it was working in a "positive manner" with student groups and institutions.
Loans chaos as officials do it 'their way'
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