Exclusive 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-centred student finance system."

It was supposed to tackle the "very poor" student experience, due to a lack of case information and introduce a modern, integrated and flexible IT system to enable "the safe delivery of HE reform, including changes to borrowers’ repayment terms including variable interest rates."

However, the project was quietly shelved last year following an assessment by the Major Projects Authority, according to a Freedom of Information response sent to The Register today.

The note said the project was formally closed in September 2015 to "allow for a tighter focus on specific priority areas of investment."

Back in 2013 the chairman of the SLC, Christian Brodie, said: "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."

Outsourcer HCL was appointed as delivery partner to build replacement Core Ledger and Security modules, with three online applications going live in January 2014. The Register understands that problems arose between integrating the internally developed software and the core engine provided by HCL.

The debacle has echoes of the Rural Payments Agency IT disaster, which saw the blurred lines of accountability between GDS and the agency end in a failure to integrate the digital front-end with the back-end system.

That led to a budget overrun of 40 per cent to £215m, and will incur penalties from the EU of £180m per year. The Public Accounts Committee later described a digital reset by GDS as "inappropriate".

Much like the RPA, the SLC has also been held up as a digital exemplar. Both agencies also have a long history of IT disasters.

The FoI response sent to The Register said: "The total amount spent on the Programme between its inception in 2013 and March 2015 was £48.8m. The predicted lifecycle benefits of the Programme, as validated by PricewaterhouseCoopers (PWC) are valued at £94.1m. These benefits are derived from a number of process and system improvements."

But the cancellation of the project raises a huge question over how SLC will now cope with the increase in student numbers and repayments. The total value of outstanding student loans will increase from £46bn in 2013 to approximately £200bn by 2042, the National Audit Office has said.

The Register has contacted the SLC for further comment. ®