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Exponential growth of VET-FEE HELP as sector opened to private colleges

The looting of VET FEE-HELP

7 April 2016

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A report presented on ABC Radio National provides an insight into the thinking of the providers who have virtually looted VET FEE-HELP: it was all within the rules, apparently, so that made it all right.  As this extract shows, the greater part of the loot flowed to a handful of providers, all of which were relatively recently established, with no track record of provision, let alone quality provision.  In the space of a couple of years, for example, Ivan Brown,  turned a $500 start-up investment into a stake in a listed company worth $180 million (Australian Careers Network), all built on the back of government training subsidies.  The whole report is worth reading – ‘I’m not a cowboy’: Phoenix Institute investor maintains private college did nothing wrong.

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Outflows under the VET FEE-HELP scheme have grown exponentially in recent years, particularly after Brown 12012 when the Gillard government struck new national partnership agreements with the states and territories that set ambitious targets for growth in vocational qualifications and tied funding to the opening up of the training industry to private competition.

When it was opened up in 2009, the scheme lent out $26 million, which grew to $118 million in 2010, $205 million in 2011, $325 million in 2012 and $699 million in 2013. Over the first five years of the scheme inclusive, coinciding roughly with the term of the former Labor government, the VET FEE-HELP loans totalled $1.4 billion.

Under the Coalition, VET FEE-HELP loans leapt to $1.8 billion in 2014 and a staggering $3 billion in 2015.

That makes a total exceeding $6 billion lent out during the entire VET FEE-HELP scheme, of which three-quarters is estimated to have flowed to private training colleges.  According to Background Briefing‘s analysis, based on official data provided in parliament, and incorporating preliminary estimates of total VET FEE-HELP funding in 2015, the eight biggest private training colleges received $2.2 billion between them over the first seven years of the scheme.

VET FEE-HELP 2015

Those eight colleges are Evocca ($607 million), Careers Australia ($482 million), Study Group Australia ($300 million), Think! ($223 million), the Australian Institute of Professional Education ($210 million), Unique ($140 million), Phoenix ($113 million) and Cornerstone ($94 million).

Brown 2Of those eight, four have now been subject of prosecution by the ACCC and/or deregistration action by the ASQA, including AIPE, Unique, Phoenix and Cornerstone. Three others—Careers Australia, Evocca, and Study Group—have been subject of media exposes for hard-sell practices. All three have been audited by ASQA and, while found compliant, had extra reporting requirements imposed. Study Group was linked to the collapse of Aspire College and Evocca is facing a class action, and recently laid off hundreds of staff.

Taxpayers have been left counting the cost. Recent estimates suggest the government will have to write off $3 billion in bad debts in vocational education alone.

See
I’m not a cowboy’: Phoenix Institute investor maintains private college did nothing wrong.

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