Students' living expenses are being paid by emergency loans from their college after delays hit about 150,000 education maintenance allowance payments.
South Cheshire College stepped in after the Pounds 30-a-week payments were delayed when a new company, Liberata, took over the Pounds 80 million contract for sorting applications.
The Learning and Skills Council said the telephone helpline had been crashing, an online application system had to be abandoned because it was not ready in time, and the processing system had suffered from problems. But it said an extra 300 staff had been brought in to help clear the backlog.
Trevor Fellowes, director of learner support at the LSC, said: "Some payments will be delayed."
Beth Walker, vice-president for FE at the National Union of Students, said: "Every year, students have to struggle through unwieldy bureaucracy to obtain the EMA. The Government must not put them at risk through bad contracts."