Student Loans System on Brink of Collapse Due to Outdated IT
The UK’s student loans system is at risk of collapse due to ageing technology, leaving millions of university students without government-backed loans. The Student Loans Company (SLC), which is responsible for administering student loans, has been criticised for its inefficient IT systems, which are in dire need of modernisation.
According to a report in The Times, the SLC’s IT systems are "dogged by inefficiency" and are at risk of "critical collapse". The systems, which include eight separate IT platforms, six of which run on outdated technology, are no longer supported and are not compliant with data protection laws or cybersecure. This has resulted in staff manually inputting data and moving it between systems, with 45 per cent of staff performing tasks that could be done better by computers and artificial intelligence.
The Department for Education (DfE) has ordered the SLC to overhaul its IT systems as part of a crackdown on quangos to reduce bureaucracy. Education Secretary Bridget Phillipson believes that modernising the IT systems could increase revenue raised by the SLC to £145 million over five years, in part by making it easier for students to repay loans faster. Phillipson has kicked off an effort to streamline the SLC, one of 18 arm’s-length bodies run by the DfE, to redirect money to frontline education services.
The SLC’s failure to modernise its processing has led to costs rising by 60 per cent in four years, from £160 million in 2019-20 to £255 million in 2023-24. A government audit found that 45 per cent of SLC staff, out of 3,300 across four sites, are paid within 2 per cent of the national living wage to manually perform administration tasks. Phillipson believes that many of these tasks could be done automatically, reducing costs and potentially leading to a need for fewer staff.
As reported by The Times, the government is keen to reduce the number of quangos covered by the DfE, which has risen by eight since 2010. The effort to streamline the SLC is part of a broader campaign to reduce the sprawl of bureaucracy across Whitehall, by reducing the size of arm’s-length bodies or bringing them under direct ministerial control.
A government source said: "The education secretary thinks that nothing is more important than delivering for children and families through our Plan for Change. She wants to build nurseries, schools and colleges ready for the 2030s — that’s why she is taking an axe to bureaucracy from bygone eras with upgraded tech, so money can be put where it’s needed." The source added that Phillipson is working to put more cash into delivering high and rising standards across a reformed education system.
The modernisation of the SLC’s IT systems is seen as a crucial step in reducing bureaucracy and improving efficiency. As The Times reported, the SLC’s ageing technology poses a significant risk to millions of students who rely on government-backed loans to fund their education. The collapse of the system would not only leave students without finance but also put their personal data at risk.
In a bid to tackle waste, Phillipson is leading an effort to reduce the size of quangos and improve efficiency. The overhaul of the SLC’s IT systems is just the beginning of a broader effort to modernise the education sector and put more resources into frontline education services. As the government prepares for the spending review, which will set budgets across Whitehall for the next three years, Phillipson’s efforts to streamline the SLC and reduce bureaucracy are seen as a crucial step in delivering a more efficient and effective education system.
According to The Times, the government is working to reduce the number of quangos and improve efficiency, with the SLC being a prime example of where modernisation is needed. The source added that the education secretary is committed to putting more resources into frontline education services, and that the modernisation of the SLC’s IT systems is a key part of this effort.
The article in The Times also noted that the SLC’s inefficient IT systems have resulted in a significant increase in costs, with the organisation’s expenditure rising by 60 per cent in just four years. This increase in costs is unsustainable and highlights the need for modernisation.
In conclusion, the student loans system is on the brink of collapse due to outdated IT, and the government is working to modernise the system and improve efficiency. As reported by The Times, the education secretary is committed to putting more resources into frontline education services, and the modernisation of the SLC’s IT systems is a key part of this effort.
