The federal government will waive $21 million in tertiary debt and overhaul IT systems after a tech bungle held nearly 20,000 students’ loans up for years in internal systems.
Some students are yet to be notified of their debt, nearly a year after the issue was identified, while total affected students and debt has more than doubled.
Tuesday’s Budget set aside $79 million to upgrade the ageing systems, some of which are interim solutions running nearly half a decade longer than originally planned.
An outside review of the technology is understood to have found the IT system is complex, highly fragmented, reliant on disparate and duplicate databases and extensive manual intervention.
The total number of students impacted has doubled to 19,990 since the incident was reported last year, while the debts in question have risen to $66.6 million.
Some loans are being waived altogether, while millions in indexation will also be foregone.
An update to an IT system in August last year unexpectedly transferred some historical VET loan records to students’ Australian Tax Office accounts.
None of the debts had been raised incorrectly but the IT glitch meant the income contingent loans had not been transferred to students’ profiles earlier when they should have been, in some cases many years prior.
Surprised students began raising concerns and the Department of Employment and Workplace Relations, which commissioned an independent review.
Consulting giant PwC was brought in in October to assist in the review of the IT system at a cost of more than $438,000.
The following month, the department found further affected student loan records that are still pending in its IT systems today.
These loan records have not yet been transferred to students’ ATO accounts and are expected to start doing so next month, when students will be notified via email, letter and SMS.
In total, 19,990 students have been identified with delayed loans, with $66.6 million in total affected debt – almost all of it being incurred between 2017 and 2022.
“All indexation will be waived for affected students for the period in which their loan did not appear on their ATO account in order to ensure they are not unfairly financially disadvantaged,” a the Department of Employment and Workplace Relations spokesperson told InnovationAus.com.
“For students whose loans are from earlier than 2017, the government has waived the entire loan.”
Budget papers released this week show the expected cost of foregoing the indexation and some of the older loans entirely will be $ 20.9 million.
This includes the waiving debt from the VET FEE-HELP loans issued from 2009 to 2016, and indexation on loans from the Higher Education Loan Program, the VET Student Loans program, the Trade Support Loans and on the more recent VET FEE-HELP loans.
InnovationAus.com understands the IT system at the root of the problem was launched in 2017 and only intended to run as an interim solution for two years.
A report based on the independent review will be released shortly, but the department would not disclose exactly what the PwC consultants had provided or share their advice.
The funding in Tuesday’s Budget addresses the recommendations of the independent review, all of which have been accepted.
