EDUCATION Minister Ruairi Quinn apologised last night as it emerged that only 3,000 of an expected 35,000 grants to new students have been paid out.
It came after a day of growing anger over the debacle of processing maintenance grants this year.
Even with extra staff from Monday, grant approval for at least 5,000 students is not expected before Christmas.
A new centralised system known as SUSI was supposed to speed up the payment of grants, but yesterday it was criticised for having too few staff and too much red tape.
More staff are being promised to deal with the backlog, but Union of Students in Ireland (USI) president John Logue said it would not be enough and also raised issues about the adequacy of staff training.
City of Dublin VEC, which is operating SUSI, was brought before the Oireachtas education committee to explain the delays.
TDs and senators have been flooded with complaints from constituents and issues raised with CEO Jacinta Stewart and her officials included lost documentation and errors.
USI president John Logue said the delays were causing unacceptable hardship for students and their families and, in some cases, college dropouts.
The payment of the €2,250 Student Contribution Charge to colleges on behalf of students in receipt of maintenance grants does not go ahead until the grant has been approved.
This has the potential to cause difficulties for students, who may be denied access to college service such as libraries, and even sitting exams, until the €2,250 is paid.
However, the Higher Education Authority (HEA) has written to colleges asking them to be flexible in relation to matters such as libraries and exams.
Taoiseach Enda Kenny was brought into the controversy yesterday and speaking in the Dail said it was "unacceptable" to have such delays.
Adding to the pressure on the Government, Fianna Fail put down a motion in the Dail last night.
During the debate, Mr Quinn said he "deeply regretted" what had happened.
"I am responsible and you can have a go at me as much as you like and I'll accept it, because I'm the person responsible at the end of the day," he said, adding that he was "hugely conscious" of students who were struggling in very difficult times.
The Oireachtas committee heard that CDVEC processes the applications, but the back-up documentation from students is verified by a company in Cork.
With the addition of 10 new staff next Monday, SUSI will have the equivalent of 67.5 full-time staff. The Cork centre has the equivalent of 27 full-time staff.
Those figures compare with the hundreds of staff spread across 66 local authorities or Vocational Education Committees (VECs) who traditionally process grants.
Ms Stewart admitted yesterday that mistakes had been made.
There have been 66,000 applications to SUSI and Oireachtas committee members were told that about 35,000 of these could expect to be approved.
To date 20,350 applications have been fully processed, 9,555 of which have been refused while 3,010 have been paid.
CDVEC said of the balance, 14,500 had not responded to a request for further documentation while 6,000 had submitted incomplete documentation.