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Crackdown on rorters looming

1 December 2015

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As the Senate prepares to debate the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015 to toughen up administration of the VET FEE-HELP scheme, the government has announced that VET providers with VET FEE-HELP will be hit with an emergency funding freeze next year to rein in unscrupulous providers and end widespread rorting of the student loan scheme, should the legislation pass.

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bureaucracy--large-msg-125245730164 The Senate Education and Employment Committee has recommended passage of the bill, although both Labor and the Greens propose amendments to toughen it up further.

The committee report paints a picture of a scheme running out of control, to the point where VET FEE-HELP debt could conceivably overtake HECS-HELP debt this year or next.

Between 2009 and 2014:

  • the number of VET providers approved to participate in the VET FEE-HELP scheme increased from 39 to 224;
  • the number of students accessing VET FEE-HELP loans increased from 5 262 to 202 766; and,
  • the total annual value of VET FEE-HELP loans provided to students increased from $25.6 million to $1.76 billion.

VET FEE-HELP table

Along with that, fees are growing exponentiallyThe average cost of an information technology diploma has increased from $2779 in 2011 to $18,735, increasing by 84.9 per cent between 2013 and 2014. A diploma of business management which cost $4623 in 2011 now costs $15,493.

VET Fees

 As currently framed, the amended legislation would:

  • introduce new requirements for VET FEE-HELP approved VET providers to establish minimum prerequisites, including minimum numeracy, language, and literacy skills, before allowing student to enrol in a VET course for which they are entitled to receive a VET FEE-HELP loan;
  • require a two business day period between course enrolment and application for a VET FEE-HELP loan to enable students to consider their payment options;
  • require a parent’s approval before any student under the age of 18 can request a VET FEE-HELP loan;
  • broaden the circumstances in which a student can seek a re-credit of their VET FEE-HELP loan debt balance and remission of a debt where it is proven that, as a result of unacceptable behaviour by the VET provider (or their agent), the student enrolled with the VET provider and subsequently received a VET FEE-HELP loan;
  • introduce a minimum registration and trading history requirement as additional eligibility criteria for admitting new VET providers to the VET FEE-HELP loan scheme to enhance the integrity of the scheme by ensuring all VET providers are suitably experienced and have had the chance to demonstrate they are quality education and training operators;
  • introduce an infringement notice scheme aimed at VET providers who engage in inappropriate marketing and administrative practices found to contravene the civil penalty;
  • will extend the Commonwealth and the National VET Regulator’s powers with respect to monitoring and investigation. The bill does this by making the civil penalty provisions and relevant information subject to monitoring by the department and the National VET Regulator under Part 2 (Monitoring) of the Regulatory Powers Act.
  • provide that each of the civil penalty provisions is enforceable by the department under Part 4 of the Regulatory Powers Act.

Labor proposes the creation of an office of Student Ombudsman, putting some form of cap on tuition fees and banning or at least directly regulating brokers and other third party agents.  The Greens propose that private providers be excluded from the VET FEE-HELP scheme altogether.

Minister for vocational education Luke Hartsuyker has announced that, contingent on the legislation passing, a package of “urgent” measures will be introduced to limit growth in the vocational sector while the government develops a new funding model to come into effect in 2017.

Under the proposed measures, a freeze on loans to providers will be put in place at 2015 levels.

In addition, new conditions will be placed on providers seeking to register for the VET FEE-HELP scheme, payments will be made in arrears for actual enrolment numbers rather than forecast figures, and the department will have new powers to suspend payments to providers of concern.

Hartsuyker said the transitional arrangements would be put in place, ahead of the introduction of a new funding model to be developed in consultation with the sector over the next 12 months.

Under the crackdown, the department would be able to pause payments to organisations if there are concerns that they “are not delivering the types of services that we would rightly expect”.

TAFE Directors Australia, representing Australia’s public vocational education sector, immediately welcomed the government’s announcement, calling it a “long-awaited crackdown”.

The TDA’s chief executive, Martin Riordan, said it was “a series of extraordinary emergency measures”.

TAFE agrees that special amending VET FEE-HELP legislation is warranted to protect students from (January next year).  We hope it will be the start of a more balanced approach in vocational education, and the start of far more prudent governance.

The National Tertiary Education Union has called for the creation of an office of ombudsman and says that VET FEE-HELP should not be extended to “for-profit” providers:

Given the weight of evidence about the unethical behaviour of for-profit providers, the NTEU believes that the only way to eliminate further risks is by ensuring VET FEE HELP loans are only available to students enrolled at public institutions or not for-profit community providers.

The Bill will pass in some form, given the problems enveloping the sector, possibly with a compromise around the appointment of an ombudsman, with consideration of fee caps in the funding model to be introduced in 2017.

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