Heading off to university offers many students their first taste of adult life: their first adult relationships, the trials of flatsharing, budgeting, managing workloads, as well as drinking to excess and failing to adequately feed themselves. But for some it’s not as simple as mere growing pains: the university culture and student finance system can entrench existing inequalities at every step, with students from wealthy backgrounds able to rent superior accommodation, while students from less affluent backgrounds struggle with money, and students estranged from their families are left without accommodation during the holidays. As if that wasn’t bad enough, now the Student Loan Company has been accused of spying on vulnerable students.

A number of students who reported estrangement from their parents when applying for student finance reportedly had their social media monitored, with staff at the SLC searching for proof that the students had disproved their claims by making contact with their parents to disprove their claims. Several students had their loan payments stopped and then some are said to have dropped out of university despite no findings of fraud against them.

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Even before this revelation, the system was a mess, and one designed without an ounce of human empathy. Applying for university in 2006, I had to provide the Student Loan Company with proof that I was estranged from my parents, and didn’t have the support others did when embarking on a degree. The SLC wrote to my parents to ask for confirmation of this situation.

The weeks before it came through were tense – the letter arrived, though I was worried my parents wouldn’t comply. The system was open to abuse, forcing young people who have split irrevocably from their family to rely on their participation to gain basic funding for university; they may well have been subject to abuse or coercive control at the hands of the very people now key to them securing a loan.

To confirm estrangement now, students must secure a letter from a teacher, social worker, police officer or support worker explaining in detail the reasons for the estrangement. This is a difficult and potentially intrusive process, since the person supplying the evidence may be contacted for more detail, or their boss may be asked to provide evidence of their relationship to the student. Furthermore, “estrangement” is defined as 12 months without verbal or written contact with either parent, a condition which implies that any attempt to maintain even the most distant contact with parents means they will and can provide financial support.

This condition entrenches estrangement, because students who try to maintain sporadic contact to keep in touch with siblings are denied support by the SLC. Had I managed to contact my absent father while applying for university, I’d have been denied a significant chunk of my student loan. The system only worsens an already tough situation: most estranged students are unhappy about their situation, and part of adulthood is about offering forgiveness and managing difficult relationships: instead, the SLC conditions allow for no complexity in how we deal with family rifts.

If you do manage to jump through the hoops necessary, university is no easier: standard lets in halls are for 30 weeks – the rare 39-week halls I stayed in were filled mostly with international students and a handful of others like me, who had nowhere to go during the holidays. Sequestered away from the majority of our peers, we were physically isolated, spending the long holidays working hard to make as much money as possible to support ourselves while all our friends had returned home. This only emphasised how alone we were.

The student loan is still a pittance, compared with living costs: you can just about get by, with work and family help, if you’re spending every holiday at home, living rent-free and being fed by your parents. The rest of us racked up debt, while suffering from a much higher rate of depression and anxiety: Barnardo’s estimates that half of the young people leaving care have mental-health problems, and two-thirds of those are not having their mental-health needs met. Very few children who grow up in care end up at university – only 6% compared with 50% of the general population; and once you’re through the doors, staying in is immensely tough, as both financial and psychological pressures mount.

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To imagine then being spied on in addition to this hardship is obscene. If this has been happening, the students have been treated as criminals – suspected of attempting to borrow a few hundred pounds extra by fabricating a sob story about being unwanted by their parents, even though the difference in loans is negligible, and the money has to be paid back.

Students are not lying – this exercise is simply an extension of the politicisation of all financial state support. Just as benefit claimants have been spied on, now students are too, all while the marketisation of higher education speeds on.

The universities minister, Sam Gyimah, recently attacked vice-chancellors for not focusing on student mental health, in a barb that was misguided and opportunistic from a government that has drastically underfunded mental health services. But if Gyimah is serious about student welfare, any spying on students must end immediately and be accompanied by an apology and an investigation, and estranged students getting the support they genuinely need.

• Dawn Foster is a Guardian columnist