Sources close to the agency claim that this is because much of the RM45.41 billion loans approved as at Aug 31, 2012, were given out to students whom PTPTN can no longer trace.
Electronic data sitting in its 10-year-old Education Loan Management System (Elmas), sources claim, remain seriously outdated, leaving PTPTN little hopes of retrieving the unpaid debt.
As at Aug 31, 2012, RM7.83 billion disbursed to 1.14 million students was still uncollected, with the repayment rate standing at 49 percent.
This was despite the removal of Finance Ministry subsidiary Prokhas Sdn Bhd in 2010, following the 2009 Auditor-General's Report, for failing to develop a loan recovery system after being paid RM1.5 million.
Prokhas' shambolic system drove PTPTN to fall back on Elmas, an earlier system it had already decided was not good enough in 2006.
And for this, PTPTN had to pay Elmas developer, Paradigm Systems Sdn Bhd, another RM26 million to re-do the job - a cost PTPTN chief executive officer Agos Cholan is reluctant to confirm, citing sensitivity.
It is understood that the justification for the large fee is that Paradigm will not only be fixing the obsolete Prokhas system, but it was also be building a new system, based on its previous Elmas, as well as to provide the necessary hardware.
"It is not just one, but a few projects together... The number of loans that PTPTN is dealing with since 1997 is more than what any bank is handling," said a source in the know.
Agos (left) confirms that the Elmas system is being "modified" to improve the system, albeit "running on an old engine".
"We used to go on servers, but now everything is web-based," he said, noting that Paradigm is a reputable computer programme developer.
Agos said that the most urgent part - migrating old data to the new system - was done, with "three or four modules" yet to be completed.
"But that doesn't mean we can't work, we can," he stressed.
However, industry players claim that instead of building a customised system, PTPTN should instead buy an existing system used by banks for under RM10 million and tweak it to fit its requirements.
Disaster waiting to happen
The PTPTN mountain of bad debt, according to parliamentary records, appears to be a disaster waiting to happen.
PTPTN began operations in 1997 with no electronic loan management system, keeping the records "manually" at first, before trying out several different computer systems until 2003.
Paradigm Systems won the tender to develop Elmas in 2003, but three years later, due to problems with the new system, PTPTN was already visiting banks to find out how the financial institutions manage their loans.
According to its website, Paradigm is a knowledge management solutions provider including library cataloguing systems.
So intent was PTPTN to replace Elmas that they had called for tender for yet another system, and issued a letter of intent to the selected company, a Public Accounts Committee proceedings minutes reveal.
But this was thwarted when Finance Ministry's Prokhas abruptly stepped in. However, its solution was apparently much worse.
Records show that Prokhas blamed data integrity for its failure, saying that PTPTN had not "scrubbed" the data so it would be "clean" enough to migrate to its new system.
Insiders say this problem still persists but Agos, a former banker, said that compared to the "messed-up" Prokhas system, Paradigm's Elmas is doing "much better".
"People can now go to the Internet and get their repayment outstanding. It took PTPTN a couple of years to reconstruct this.
"Before there was RM5 billion of loans that were questionable. At one time, we didn't know who took out loans or who has paid. The numbers weren't there... but it has all been rectified," he said.
While he declined to disclose if the data has been scrubbed clean, Agos said that the new system, which is now 50 to 60 percent complete and will be all set by 2013.
It is understood that the Paradigm contract with PTPTN includes transfer of skills from the vendor to the agency, with PTPTN expected to be able to operate and maintain the system upon completion.
However, PTPTN has the prerogative to extend the contract with Paradigm on maintenance and upgrade.
"There are weaknesses still, but we believe that by 2014, it will include new things which will take us to a different level," Agos said.
Paradigm is unable to comment on the matter due to a non-disclosure agreement with PTPTN.