The Chairman and Chief Executive of the Student Loans Company (SLC) have been forced to quit after thousands of students were left without grants or loans following the chaos of the loans system.

John Goodfellow was asked to step down as Chairman while the Chief Executive Ralph Seymour-Jackson was forced to quit after ministers said they had ‘no confidence’ in his leadership.

Thousands of students were left without loans or grants at the start of term, with long delays meaning that many were still left without any cash halfway through the term following a catalogue of administration problems.

The Universities Minister, David Willetts, said: “Last year the service fell short of what students and their parents had every right to expect. While improvements have been put in place since last year, we are not out of the woods yet.”

Business Secretary, Vince Cable, added: "Last year's crisis in the Student Loans Company caused real upset for students and their families, many of whom lost confidence in the system. We must avoid a repetition of the problems.

"I believe a new chair and chief executive will provide the fresh leadership needed to deliver the remaining changes necessary for an improved service to customers this summer."

Problems were first detected last autumn but SLC chiefs said that any delays were on a par with those experienced in previous years but a Freedom of Information request showed that a whopping 50,000 students were still awaiting their student loans or grants.

Reports highlighted the fact that the management behind the loans system had underestimated the entirety of the tasks that needed completing and so they fell behind with applications.

A report by the National Audit Office highlighted the fact that problems could still reoccur this year, although improvements have been made.