Student finance has not been a very exciting sector, until along came Gordon Brown’s announcement of the sale of £6bn of the Student Loans Company’s loan book, the £12.5bn sale of Sallie Mae to private equity firms and the ever-growing scandal about the illegal marketing practices undertaken by many US student loan companies. 

However, the biggest local story relating to student finance has quietly slipped under the radar. The story is about the restructure and growth of the SLC under a project initiated by the DfES called Customer First (CF).

The changes aimed at making the SLC a ‘customer focused national delivery organisation’ are very substantial and will see the SLC taking over all responsibility for HE grants, something previously done in conjunction with Local Authorities. When complete, CF will see an enlarged SLC. Exactly how many more than the current 1000 civil servants has yet to be disclosed, although the SLC are thought to have signed a lease for larger premises in Glasgow in January. Completing these new offices is seen as important by the SLC’s Board who noted that the whole programme could be at risk as any construction would mean ‘no recruitment could commence’. CF will also see the SLC working more closely with Her Majesty’s Customs and Excise (HMRC) and the Identity and Passport Service (IPS). The new arrangements will be implemented gradually; students applying for the 2008/9 academic year will be able to apply online by September 2008.

When you look through all the documentation surrounding the proposed changes one thing really stands out – the fact that in 2004, 42% of student loans were deemed to be ‘Not In the Correct Status’. That by itself must raise serious concerns about whether the SLC can deliver its existing mandate, let alone a wider one. To be fair, the SLC has tried to sort out some of these issues, but even in 2006 there were significant problems, with the SLC blaming a computer problem at HMRC. In 2006 this issue affected 22,000 former students, just over 1% of the SLC’s 2.4m customers, but a gigantic leap from 2001 when the number was just 270.

When the Shadow Education Secretary, David Willets complained that ‘for a commercial organisation this is not acceptable’, he hit the problem on the head. Unfortunately, the recent Tory pronouncements about grammar schools have done little to engender confidence in their education policies. The SLC is in fact a Non-Departmental Public Body, owned by the DfEs and has a monopoly on the provision of HE loans to students. While the CEO’s pay may be modest by comparison to his counterparts in the private sector, we suspect that even the SLC’s customers would not mind paying more for a better performing organisation. If, like its US counterpart Sallie Mae, the SLC were privatised, then we might see real innovation in customer service, not just another superficial renovation of another quango!