The university has said that students living within 40 miles of campus would not be offered accommodation after a higher demand than usual for rooms.
Others will be allocated accommodation at Ulster University’s old halls of residence at its Jordanstown campus, and given free transport into Belfast city.
Ms McLaughlin said many students were now left with nowhere to live or scrambling for suitable accommodation.
She called on the university to apologise to students and to compensate students who have now been told either that they will not receive accommodation, or are being allocated accommodation at Jordanstown.
Said the Foyle MLA: “Queen’s University has seriously mismanaged its accommodation allocations this year.
“Hundreds of students at both Queen’s and Ulster University will now have accommodation that is far below the standard and convenience that they thought they had been guaranteed.
“A large number of students will now be commuting every day between old halls at Ulster’s Jordanstown campus and either Queen’s in Belfast, or to Ulster’s own campus in Belfast.
“These students understandably expected to have accommodation in the centre of Belfast, with the quality of experience associated with that.
“Queen’s needs to first apologise to students and admit their mistakes and secondly to provide financial compensation to those students who will now get unsuitable accommodation, or, in the case of many, no accommodation at all.
“At present, only those students who voluntarily agreed to withdraw their accommodation requests have been promised financial compensation by the university.
“Given the number of university students now located in the centre of Belfast, both Queen’s and Ulster University need to urgently review accommodation arrangements for next year and ensure that future intakes do not suffer in the same way as this year.
“I received complaints about the accommodation arrangements at Queen’s last year, so it is strange that the university was apparently caught by surprise this year by the increased number of students seeking accommodation.”