Many of Hinckley and Bosworth's poorest sixth-form students faced long delays getting their grants because the company administering the grants failed to fulfill its contract.
Liberata, the company administering the Government's Education Maintenance Allowance, is to be replaced. Liberal Democrat Parliamentary Spokesman for Bosworth, Michael Mullaney said: "Action by the Government on this issue is long overdue. The administration of the Education Maintenance Allowance has been an utter shambles
The EMA is a means tested £30 a week maintenance grant to encourage children to stay on in full time education when they reach 16. The delays to thousands of payments meant many teenagers were forced to drop out of courses
Michael Mullaney went on to say: "The Government must explain why it appears to have been employing contractors who haven't displayed the basic competence to manage their responsibilities.
"This chaotic situation has led to real problems for many local students."