back to article Student Loans Company burns £50 million in IT project superfail

The UK's Student Loans Company has wasted £50m on a canned IT transformation project, designed to provide a “digital by default” system to cope with a major increase in student numbers. The programme was launched in 2013 in conjunction with the Government Digital Service and was intended to be a "robust and agile customer- …

  1. m0rt

    At some point these numbers all become meaningless for just how bad the issues are. We just end up throwing money away.

    As for managing student loans, why not use a bank?

    Banks handle this kind of thing all the time. So make the student loan effectively like a bank account, with specific rates, if any. So as it gets paid off, the amount reduces etc. Notes are currently made by banks against a custmer account when a customer contacts them. So the model already exists in a working state....(I assume, I don't work for a bank so I have no idea how much gaffer tape is used).

    If only there was a state owned bank that they could use as a guinea pig...oh wait...argh too late.

    EDIT: AND another makes the figures in this news report: seem laughable in terms of the money that is just burned, or rather, passed to suppliers, by the continuing poor, shoddy work that hangs around the neck of Governmental IT.

    1. Dan 55 Silver badge

      As for managing student loans, why not use a bank?

      Banks handle this kind of thing all the time. So make the student loan effectively like a bank account, with specific rates, if any. So as it gets paid off, the amount reduces etc. Notes are currently made by banks against a custmer account when a customer contacts them. So the model already exists in a working state....(I assume, I don't work for a bank so I have no idea how much gaffer tape is used).

      It was originally set up like this because the loans were low interest and banks didn't want to take them on as there was no(t enough) profit. That's not the case now.

      Payment is linked to NI contributions which is another reason, although now the interest rate problem is solved I'm sure banks would be happy to work something out considering that they'd have a captive for life. No leaving and think of all the cross selling possibilities.

      1. A Non e-mouse Silver badge

        @Dan 55

        So if there's not enough profit in it for the banks, why don't the government pay the banks to run the scheme? Surely that must be cheaper than the government doing it - and making a mess of it.

        1. Anonymous Coward
          Anonymous Coward

          Re: @Dan 55

          Banks will happily run it if they can make money out of it. That means government underwriting the billions of loans that won't ever be repaid. Problem is that banks won't be looking for a nice single digit return, they'll be looking to screw the government, the taxpayer, and the poor buggers with student loans. They'd slice and dice the entire portfolio in to differing risk profiles and return rates (the return of the CDO, for those who will recall that work of the devil), get themselves a made up credit rating, flog the low return bits to pension funds who are obliged to buy such stuff, and then sit on a big fat return, knowing that when the inevitable bust comes along, the taxpayer will again bail out the banks.

          The whole concept of student loans is shite dreamt up by arts graduates. The only loans to get repaid will, be by graduates who have studied an employable subject with prospects, whereas the scheme offers what will ultimately be free education and luxury lodgings for anybody studying a drongo subject, or lacking the ability ever to get any decent job (or sensible enough to emigrate).

          1. TRT Silver badge

            Re: @Dan 55

            The SLC needs to go all together.

            In it's place I would propose the following.

            (1) Scrap tuition fees. Payments to be made from central government funds,

            (2) Allow students to claim benefits, including housing benefits, at age 18-21, something Osborne scrapped. Benefits should be means tested, as currently, for those students who work. With the requirement he introduced for 18-21 year olds to enter apprenticeship, employment, education or training, there isn't any more work involved in tracking this age group anyway.

            (3) Introduce a blanket 'graduate tax' of 2% on the standard band, 3% on the higher rate and 5% on the top rate, the modified PAYE tax code being verifiable by checking against the CV / person spec of the job, and through a register of graduates against their NI number. I've run the calculations based on figures from the National Audit Office and at that rate, given the pay enhancement and career progress of graduates, this scheme would return 1.5 times as much to the treasury as the SLC does as well as the consummate savings of lower levels of administration.

            (4) Persons not graduating would be required to repay their tuition fees only by way of setting an HMRC tax debt.

            The difference between this and the old (pre-1988) system of student grants was that under the old scheme the maintenance grant was means tested against the parent's wealth and that process was carried out by the local authority of the home address of the student. The post-2012 system does means test the parents for the living expenses, and that is carried out by a centralised organisation. The system I propose would have no need to means test the parents, but any income by way of a gift or voluntary payment would have to be declared if it amounts to more than a quarter of the Universal Credit or Job Seekres entitlement for ALL claimants of benefits, and as usual any savings amounting over £6,000 would have to be declared. There's the question of what to do about those who go overseas, or EU students returning to their home country, but e.g. the US imposes income tax on overseas earnings, and if we remain with EU ties, these could also include some sort of reciprocal tax or repayment arrangement.

            Of course, there's some fine tuning on this, but the whole idea of effectively a not-for-profit bank set up by government to manage something which, at the end of the day, only arises from a capitalistic philosophy no more valid than any other theory of government and society, gives me the heebie-jeebies.

          2. foo_bar_baz

            @Ledswinger Re: @Dan 55

            Have an upvote and a beer. This cheered me up.

      2. Iain 15

        Existing software

        I worked for a debt management company and I know there are many many off the shelf account management software solutions for debt management, all of which cover everything you need for the SLC to operate effectively. Instead of tendering for products from scratch civil servants need to actually do some real research in the real world, rather than just talking to a few unscrupulous company BDs who take advantage of their willful ignorance and persuade them that what they really need is a brand new set up at twenty times the price.

  2. Pen-y-gors

    How the fec....?

    do you spend £50m on something like this and not deliver anything?

    Surely the spec isn't that complex?

    There are customers

    They take out loans

    They repay the loans in stages - you may want a direct debit facility

    You need to keep track of changes of address etc

    You need to be able to write off loans

    You need to be able to produce reports and interrogate the system

    There may be annual(?) peaks in usage.

    May need to interface to some outside systems to check student status

    Okay, a bit trivial, but that's surely the main points.

    Whether you have 100K customers or 10million customers doesn't have a massive impact on the underlying requirements, rather on implementation and system capacity/resilience.

    To be honest I would have thought that is a fairly standard finance company system spec - which wouldn't cost £50m to implement and has presumably been written 100 times already.

    Could we please have some sackings.

    1. Anonymous Coward
      Anonymous Coward

      Re: How the fec....?

      But remember GDS were involved. I suspect it's quite difficult to implement the above using Wordpress...

      "Yes" to the sackings

    2. Roger Greenwood

      Re: How the fec....?

      "Could we please have some sackings."


      It was a long time ago.

      People move around.


    3. This post has been deleted by its author

    4. Anonymous Coward
      Anonymous Coward

      Re: How the fec....?

      "Could we please have some sackings."

      It really should be off with their heads time - yes I'm joking of course but it beggars belief and it will continue to happen again and again

      Anon so I don't get a visit from the rozzers .. oh wait anon is meaningless now - seems they got that bit to work.

    5. Anonymous Coward
      Anonymous Coward

      Re: How the fec....?

      It's only tax money, so there's more where this came from. As long as everybody sticked to the rules and the set up protocols there's nothing to worry about because there's no one to blame. It all went according to plan, accidents happen, lets carry on to the next million disaster.

      Seems stuff like this happens in all countries. Sometimes you wonder what you're paying tax for.

    6. greenawayr

      Re: How the fec....?


      I guess the complexity in the setup comes from the SLC somehow integrating with the tax office to understand when a student is in work and earning over a certain amount to be able to take repayments out of their paycheck.

      Not excusing the shambles, but it's a little more complicated than your standard "hand out dosh, pay back dosh or we'll send da boys around" set up I guess.

      1. John Robson Silver badge

        Re: How the fec....?

        "I guess the complexity in the setup comes from the SLC somehow integrating with the tax office"

        Hang on - we have a department who already manages finances and repayments.

        Who deal with underpayments from last year, and the overpayments they take...

        Why was this just part of the tax office to start with. Here's tuition and a grant against future tax liability...

    7. Fatman

      Re: How the fec....?

      A more satisfying idea would be to re-purpose a Medieval Siege Engine (also known as a Trebuchet) for a new purpose; launching those responsible on new career trajectories.

      The chosen landing spot could contain lots of rocks, sharp pointed spikes or other objects designed to insure a painful landing. Only then will Government IT get the message.

      I recall a (USofA) PBS documentary on the Trebuchet some time ago, and I feel it is the most appropriate way to send manglers on their way. Perhaps one could be set up to launch those responsible into the side of the Tower of London. (and correct me if I am wrong, doesn't part of that Tower abut a river?)

      1. PNGuinn


        No. We've spent a fortune trying to clean up the river.

        Make the landing spot somewhat near the river, just upstream in a spot called Westminster.

        Kill 2 birds with one stone as they say ...

    8. Anonymous Coward
      Anonymous Coward

      Re: How the fec....?

      You missed out a crucial and critical element

      GDS are involved.

      Fixed that for you.

    9. Captain DaFt

      Re: How the fec....?

      "do you spend £50m on something like this and not deliver anything?"

      It delivered... Cash to the right pockets, and promises of high paying positions later to politicians involved.

      Whether or not an actual product that was promised is delivered is beside the point.

    10. digiman

      Re: How the fec....?

      Yes, GDS were involved and shockingly many of them are contractors on ridiculous high day rates; they watch but they don't 'do', they advise but are not accountable, they support those long established bureaucratic civil servants who are neither technology or customer savvy nor inclined, those very ones who run their 'services' as an extension of their self importance and wouldn't recognise a customer if/when they stepped on one.

      Don't look too close as you might find yourself on trumped up charges and fired - especially if you are a private sector expert who joined the (un)Civil Service in the naive belief that they truly wanted the real world experience that you would bring to enable genuine government change.

      Privatise them all but not to the big corporations who just cash in on incompetent procurement departments.

    11. Anonymous Coward
      Anonymous Coward

      Re: How the fec....?

      Oh quite easily. Some years ago I worked on a satellite modem project. I was on the project for just a year, together with 160 other engineers at that time. I estimated the project to have taken 500 man years. Speaking to others later that estimate was met with the comment "oh, you don't know the half of it". OK, so it was a non-trivial modem but I have worked on other projects of comparable complexity so my estimate of no more than 50 man years is very generous, it allows for the usual inefficiency. Done properly no more than 10. Why the 5000% overrun? No significant amount of design work up front. Teams were allowed to discover what they were supposed to do as they were coding Some was written in Java, some in C++. Three different versions of Corba were used. When problems were discovered the shortest hack was adopted. This is why Agile fills me with dread.

  3. Maverick

    I'll just leave this here:

  4. Hollerithevo

    £50m - why not simply pay the fees?

    Instead of elaborate and costly infrastructures, admin etc to run a student loan programme, why not simply go back to paying students' fees to allow them to go to uni for free? Invest in our young brains and let them start out their adult lives with the help and support of the society they will benefit and be part of (and be able to 'pay forward' their good fortune).

    1. Francis Boyle

      Re: £50m - why not simply pay the fees?

      Or simply make the loan a tax liability. I like your idea better but sadly these days it seems almost utopian. (And I say that as a beneficiary of a free tertiary education - one more reason to feel old).

      1. Anonymous Coward
        Anonymous Coward

        Re: £50m - why not simply pay the fees?

        Why not pay the fees directly or make it a tax liability? Reason against both of these invloves the EU single market rules + the linked increased mobility of people now. If all fees were paid directly (as in the "good old days ... when income tax started at 30+%!) the EU rules meant all EU students would have to have their fees paid (note, in Scotland since Scottish students have free tuition all other non-UK EU students get free tuition) and assumption is they might well return to their home country before they'd made the additioanl UK tax payments topay forthis. Similarily, if it was a tax liability then anyone getting a UK university education could avoid the atx by working abroad. The current loan scheme can only really be understood as being intended to be a graduate tax where the tax payment is called a "loan repayment" so that its still a liability if you are not within the UK tax system (the load agreement students sign m,akes it clear taht if you move abroard then you are responsible for ensuring any repayments that are required are made .... and I gather that any arrears/penalities from not doing this do not get written off after 30 years like the rest of the loan)

    2. Antron Argaiv Silver badge
      Thumb Up

      Re: £50m - why not simply pay the fees?

      ...why not simply go back to paying students' fees...

      Well, yes. In retrospect, it would have been cheaper to do that...

    3. Primus Secundus Tertius

      Re: £50m - why not simply pay the fees?

      In my student days about 5% of children went to uni, and giving them the money was affordable to the rest of the population.

      Nowadays, with up to 50% of children eligible for a three year bonanza, it is not affordable.

      The mistake has been to suppose that many rather than few can benefit from a genuine university education. That's what happens when our arts graduate masters are allowed to ignore the concept of IQ because it is based on statistics, i.e. numbers.

    4. Tom 7

      Re: £50m - why not simply pay the fees?

      I see where you went wrong! When you read "robust and agile customer-centred student finance system" you very stupidly assumed the student was the customer!

  5. JimmyPage Silver badge

    Oh FFS !

    Currently I work for a company that handles 10 million + accounts without incident. Previously I worked for a company that handled 5 million accounts - again without incident.

    No one gave us £50 million.

    1. Mark 85

      Re: Oh FFS !

      No one gave us £50 million

      Obviously the crew in the C-Suite have missed an opportunity. Don't let the stockholders know or they'll demand the C-guys be fired.

  6. td0s

    As it's already linked to the revenue service why not put them there - then maybe UK PLC could have the profits - would be less of a kick in the teeth than lining some shareholders pocket. I believe they already handle 60million+ "accounts". What is the point of the student loans company?

  7. applebyJedi


    No wonder they are chasing me so vociferously!

    They lost my paperwork, so muggings here is the one being mugged by these illegitimate sons!

    Must have been an IT error all along!

    SLC are USELESS. Anyone who has been unfortunate to use their 'services' know how bad they are.

    1. Knoydart

      Re: Surprise!

      Never in my limited time on this planet have I had the displeasure of dealing with such a slow and painful organisation as the UK SLC. I wish I'd cleared my loan a lot quicker than I did so that I didn't have to deal with the mess that passes for the peak finance body for the students of the UK for as long as I did.

      Sadly they have 2p of my money in their bank account. One day I will get it back but I suspect it will be a cold cold day in hell and prob by cheque, so my bank wont know what on earth it is and they get to keep it.

  8. Anonymous Coward
    Anonymous Coward

    its not a loan its a very naughty tax

    The so-called student loans are of course a graduate tax - its just that calling them loans avoids awkward questions about why all graduates up to retirement age aren't affected.

    Over half of the current "loans" will be written off after 25 to 30 years, at a much higher cost to the taxpayer than the old system of paying the FE section directly.

    1. billat29

      Re: its not a loan its a very naughty tax

      So you say. I say that it is a cruel trick to reduce youth unemployment by making them take out loans for useless degrees.

      And... although you send documents to Darlington, the jobs are in Scotland - where, of course, they still get free education.

      My son is still getting letters amending his "award" for 2011. They are without doubt the most useless, inefficient, overly bureaucratic, self righteous, obstructive twats ever.

  9. Rich 11 Silver badge

    "We have already made progress here, becoming an exemplar Government Digital Service organisation."

    Yes, yes, we know. That's the problem.

  10. fruitoftheloon

    So, to summarise

    - they had no f'ing clue what they wante or needed

    - no f'er was in charge

    - they had no 'skin in the game'

    - no-one will get fired for BEING F'ING USELESS

    - they will probably be promoted

  11. s. pam Silver badge

    Is it G4s?

    You know, they did an excellent job mismanaging the London2012!

  12. Doctor Syntax Silver badge

    "The Transformation Programme brings us the opportunity to become a standard-bearer for the government’s digital delivery agenda. We have already made progress here, becoming an exemplar Government Digital Service organisation."


  13. Alan Hope

    Now, where did the money actually go? This level of financial mismanagement is simply not possible without substantial fraud involved and there should be prosecutions and jail-time.

  14. Anonymous Coward
    Anonymous Coward

    How can a loan portfolio of upto £200B not be profitable for banks?

    I'm struggling to understand how a load portfolio of up to £200B is not worth the banks time to run.

    Quite seriously, give me £50M and a small percentage of the total loan value (administration fee) and I'll setup and run a company to do this. We'll build the IT for you, we'll administer it and make a small profit. And no, this isn't a rash promise, I've run large govt projects far bigger than this before.

    This is where you need a private company who can lock the doors and windows, put a big sign on the door saying "Fuck off GDS", put the whole team on a bonus scheme based on successful completion of a years running, say £200,000 each, and get the dammed thing built and running. Watch and see how quick and well things could go then. The key to this is telling GDS to fuck off and getting this out of govts hands.

    If I was paying tax this year, I'd weep.

    1. Anonymous Coward
      Anonymous Coward

      Re: How can a loan portfolio of upto £200B not be profitable for banks?

      Ah, but do you really want one of our fine upstanding financial institutions running a loan scheme where they know 50% or more will not be repaid within the time limit, but that 100% of the capital + 30 years of interest at RPI (!) + 3% is guaranteed by the UK taxpayer ?

  15. mr_souter_Working

    Not surprised - their IT has been a joke for years

    in 2004 (roughly), I worked in an office near the student loans company in Glasgow - and was interested to find an open wireless network one day, I was even more interested when I connected to it and was able to browse servers. and really interested when I discovered that I could actually view the recordings of phone calls stored on these servers.

    I was never prompted for a username or password at any point.

    I did notify them, and made sure to never connect to the wireless network again - but it was available for at least 6 months if I remember rightly.

  16. Dodgy Geezer Silver badge

    Chickens home to roost

    The government used to have an agency called the Central Computer and Telecommunications Agency (CCTA)

    That ran government procurements, and never had a failed project.

    It was closed down in the 1990s as Thatcherite politics required industry to do this sort of job. And the rest is history....

  17. Winkypop Silver badge

    "robust and agile customer-centred student finance system."

    Follow a good bit of the money to the PR consultants.

    Those executive retreats charge a fortune for whale-song, joss sticks and chakra cleansing.

  18. DocTim

    'becoming an exemplar Government Digital Service organisation'



    1. a model or pattern to be copied or imitated.

    2. a typical example or instance.

    3. an original or archetype.

    4. a copy of a book or text.

    5. a piece of shit

  19. Anonymous Coward
    Anonymous Coward

    Tip of the iceberg

    They still use shared excel spreadsheets, shared by scores of people at a time, to log data from application forms. They regularly break. Causing downtime and waster hours of work has to be redone.

    The whole system is so messed up they even have problems with naming and saving files and folders as they are more or less on the ~256 character limit for the OS/servers handling it all. Only recently upgraded from xp to win7 and still use Firefox v3 (three) due to some of the in house web apps being so out of date. I E version (old, can't remember) had to be used in virtual environments until workarounds were put in place.

    Sure, if it's ain't broke... but it is, and they haven't.

  20. Alistair

    Banks running student loans

    Experience speaking here:

    DO NOT let that happen.

    Banks are responsible to SHAREHOLDERS not to customers or clients. 11 years. 11 years of futzing around, changing targets, increasing interest levels (based on that magical APR value) and back and forth between the tax folks and the bank(s) that held the loans .....

    And that 11 years of back and forth was just convincing everyone that the damn loan was PAID OFF. Hell, the BANK didn't even have copies of the paperwork that they'd sent me saying it was complete.

  21. Peter X

    What happens to the deliverables?

    When these projects fail, where do the incomplete deliverables go? Surely if they (the gov.) don't intend to use them, they should be available to the public?

  22. Anonymous Coward
    Anonymous Coward

    Cut them a bit of slack

    This article is quite unfair on the SLC.

    It suggests the £50m has delivered nothing and just needs to be written off. Not true. It has delivered a new application system and a new portal for universities to administer courses on. True, they are still relying on a 20ish year old accounting system, but the original project was to deliver so much more and has, in part, delivered. If you have used both the old (pre-2013) application and the new one, you'd understand the huge difference involved. Not to mention the massive reductions in complaints ("very poor" customer experience issues effectively addressed then) and administrative cost per customer. Try getting those figures into your Freedom of Information request.

    Anyone who thinks this is simple just doesn't understand the issues involved. It's not simple, it's horrendously complex. Just read (and attempt to understand) any set of regulations around student loan repayments to find out a small fraction of the level of complexity involved. Or ask anyone who works in financial IT to give their opinion, having any vague understanding of the requirements involved.

    We can discuss our political ideologies on free tuition fees, graduate taxes, etc., but none of that should have any reflection on SLC who are commissioned with doing a job within the current regulatory framework. They are an easy target for the media who don't bother to look at the huge sums of money which are successfully administered on a loan book of over £80bn, 1600 times the amount that has been "wasted" on improving customer experience and reducing future costs.

  23. Anonymous Coward
    Anonymous Coward

    This was entirely predictable!

    Having had quite a close look at this I'm not prepared to be so charitable. The whole strategy was flawed from the start and GDS was largely responsible for this. What has been delivered has certainly improved things but it is really lipstick on a pig. Upgrading a website and getting an App out there is OK but frankly not complex.

    Alas the 'Core Systems Transformation' was a procurement led by people who didn't understand the solution complexity but could run a very thorough and lengthy procurement process. Added to that they thought they could insure themselves by having virtually every GDS 'pet' consultancy on the program. (It wasn't only HCL who messed up!) The eventual selection went to a consortium who undoubtedly bid the lowest cost with a core application that was not greatly suited to the requirements and a promise to implement it within 12 months! Who were they kidding? If anyone believed that was possible (even in the world of Agile.....which GDS obviously thinks is the panacea to everything....) then they obviously hadn't done it before. And so here we are with another failed government IT project, which while complex should have been perfectly achievable. (with a realistic time-frame and some experienced banking technologists running it). This pails into insignificance when put alongside the Williams & Glyn fiasco so I'm not saying all the banking technologists are perfect either!

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