The value of outstanding student loans in the UK will hit a whopping £200bn by 2042, according to a spending watchdog.

The National Audit Office revealed the total value of outstanding student loans is £46bn ($75bn, €55bn) as of March this year and the organisation projects this amount will more than quadruple to a staggering £200bn in 29 years' time.

The watchdog's report also found the Student Loans Company, which provides financial support for people studying at universities and colleges throughout the UK, has paid out more than £5bn in unaccounted for loans.

In total, there were a further 368,000 who had no current UK employment record (but had paid tax in the past), and had not yet provided other earnings information that would allow the SLC and HM Revenue and Customs to establish whether they were earning enough to repay their debt.

The NAO also said the SLC has no earnings information for 36,400 borrowers.

The watchdog called on the government to improve the information held on students who have taken out loans.

"Given the expanding size of the student loan book, the Department for Business, Innovation and Skills now needs to take a more energetic and considered approach to maximising the value of the loan book to the taxpayer and achieving a high level of collection performance," said Amyas Morse, head of the National Audit Office.

The report also revealed BIS over-estimated the number of graduates who will be able to repay the new, higher student fees.

Ministers assumed that 35% of the new loans would never be repaid - but House of Commons Library analysis of the NAO's report reveals that the correct figure is more than 40%.

House of Commons Library analysis found the miscalculation means that BIS will now have to find an extra £600m a year from 2015/16, blowing a huge hole in the department's budget.

"In May, the Universities Minister was boasting of the government's 'text-book' reforms. Now we learn that blundering out-of-touch ministers got their sums so badly wrong that there's a £600m hole in the department's budget," said Liam Byrne MP, Labour's Minister for Higher Education, Skills and Science.

He added: "We need to know fast how ministers got it so wrong, and how they're going to fix it without putting the Britain's scientists, students and colleges under threat."

A BIS spokesperson said: "We need to ensure that all borrowers who are earning over the relevant payment threshold are repaying their loans including those who have moved overseas after leaving their course.

"We are continually improving the collection process for borrowers and we will carefully consider the NAO's recommendations as part of this programme."

Mick Laverty, chief executive of the SLC said: "I am pleased that the NAO report recognises the effective joint working arrangements that the SLC has with HMRC and BIS and the benefits that using the UK tax system brings for the efficient collection of student loan repayments."