Thousands of teenagers will be left without student funding at the start of the new term because of computer problems at the company administering the scheme.

Schools, sixth form and further education colleges fear that if their Education Maintenance Allowance (EMA) does not arrive soon, many students may drop out.

The failure will come as a huge embarrassment to the Government, which is trying to persuade youngsters to stay on in education after the age of 16. It follows similar delays to the marking of Key Stage tests for 11 and 14-year-olds.

The EMA is a £30 weekly payment to students aged 16 to 18 from low-income backgrounds. But colleges were reporting last night that only a small proportion of their students had received confirmation of the grant.

The Learning and Skills Council, the government agency responsible for the EMA, said that problems had arisen on a number of fronts.

New software that was supposed to replace paper application forms with an online system had to be abandoned because it was too slow. Telephone problems also meant that applicants could not get hold of anyone to ask about the delay in their application.

Rob Wye, a spokesman for the council, said that it was committed to ensuring that applicants received their money as soon as possible, although he was unable to say when. He added that Liberata, the private company that runs the EMA, would meet all the costs of dealing with the delays and would be hit with a penalty for late delivery of the project. Liberata took over running the EMA last year after securing five-year contract worth £80 million.

Barry Hansford, chairman of the National Association of Managers of Student Services, said: “The number of students who have confirmed their EMA applications is 50 per cent below what it should be at this time of year. We can’t get through to the helpline, so we can’t solve any problems we have.

“Our fear is that young people will say, ‘I’m not going to get this money after all’, and that will affect their decision on whether to stay on at college.”

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