Principals fear teenagers from low-income families will drop out as up to 250,000 still await their pound;30-a-week maintenance grants.
The Association of Colleges (AoC) believes the payment backlog has increased as students have continued to apply for the cash since the beginning of term.
An emergency meeting last week between Mark Haysom, chief executive of the Learning and Skills Council (LSC), and David Collins, president of the AoC, was followed by negotiations on Monday between principals and officials from the Department for Children, Schools and Families.
A task force - made up of the department and the two bodies - has been formed to monitor the situation.
Colleges have been reassured that when they help students who are subsequently proved to have been eligible for the education maintenance allowance (EMA) grant, they will get the money back.
But this leaves colleges having to make difficult judgments about the likely eligibility of students before committing their own funds.
Mr Collins said: “We can give lunch vouchers and things like that, which are relatively cheap, but simply allowing colleges carte blanche to give out Pounds 30 each is difficult because we may find out later they are not entitled to it.”
While the department has pledged to reimburse colleges, the need to means- test students has left some struggling to help students after Liberata, the firm responsible for administrating the grant, ran into technical problems before the start of term.
Liberata and the LSC have declined to comment. The US-owned firm faces a penalty of up to pound;3 million for the delays, which prompted the National Union of Students (NUS) to call for this money to be used to aid those who have suffered from the delays.
Mr Collins this week echoed the NUS’s demand, but no fine has been imposed.
Liberata’s contract was previously held by Capita, which ran it smoothly, principals have said.
As the crisis deepens, reports of hardship have been flowing into the AoC from colleges. One said students were skipping lunch to make ends meet, while others had dropped out. And the online system enabling colleges to register for the grants was also reported to have crashed repeatedly.
Another college said it had struggled to bear the administrative burden of carrying out means testing on affected students before issuing those most vulnerable with bus and food vouchers.
Some reported problems with the helpline, saying it was difficult to get through and that those staffing it were unable to answer questions.
Beth Walker, vice-president of the NUS, said: “It is unacceptable that there is still so much confusion around the EMA situation.
“The LSC must act to boost learner support funds to ensure adequate support for all learners in need. It must also write to all students, apologising for the situation and making it clear how they can access interim support.
“Should Liberata be fined for its part in this shambles, as the LSC has suggested, that money must be reinvested into learner support funds for students this year to ensure that the money reaches those worst affected.”
