Figures obtained under a Freedom of Information request by the Press Association show that just £280,000 has been recovered so far of the £2.45m awarded to students who didn’t meet the domicile requirements for financial assistance from the Student Loans Company, which manages student loans and grants in the UK.

“SLC has put special recovery arrangements in place to actively recoup repayment from individuals ineligible for student finance”

In order to qualify for student finance, students who are not UK residents or from within the EU must have lived in the UK for three years.

However, until September 2013, it emerged that SLC was relying on students’ word alone that they met the residence requirements.

This prompted an emergency review of over 11,000 student finance applications, which found that half did not provide proof that they had lived in the UK for three years, and 992 had been given the money before stricter checks were put in place.

In total, the review found that 766 of the students that had been awarded grants and loans since 2010 were ineligible for SLC assistance.

So far, only 98 students have repaid their grants and eight have paid off their loans in full.

In response to the 2013 review, the Department for Business, Innovation and Skills suspended payments to alternative providers, which are not publicly funded but receive indirect pubilc funding through student finance, and halted recruitment at 23 colleges.

As well as the money paid directly to students, an additional £1.15m in tuition fee loans was wrongly paid out to 138 alternative colleges, but nearly the whole amount – £1.11m – has been successfully recovered.

SLC has said that it is “actively tracking down” money that has yet to be repaid, but a deadline to recover the money has not been set.

SLC said it is “actively tracking down” money that has yet to be repaid, but a deadline has not been set

“SLC has put special recovery arrangements in place to actively recoup repayment from individuals ineligible for student finance,” a spokesperson said.

“Collecting repayments is one of SLC’s key business priorities and we are focused on collecting every pound of taxpayer money that is owed.”

This is not the first time the SLC has faced heavy criticism for mismanagement or poor recovery of funds.

Last year, a damning report by the parliamentary Business, Innovation and Skills Committee found that around 19,000 EU students and nearly 400,000 English students were in arrears on their student loan repayments or had no earnings information available due to a “worrying record of miscalculation” and poor debt collection efforts.

“We work with each individual customer to ascertain their personal circumstances and agree a repayment plan specific to them, ensuring that all repayments plans are affordable and sustainable for the customer and will not cause them financial hardship,” the SLC spokesperson added.