Govt hits reset on VET student loans

Elise Scott

(Australian Associated Press)

The federal government is overhauling vocational student loans in a move to stop dodgy providers rorting the system while saving taxpayers $7 billion.

Education Minister Simon Birmingham says the new loans program will “hit the reset button” and return integrity to the sector.

“To actually get the shonks out of the scheme, the best thing to do is to close it down,” he told ABC radio on Wednesday.

“I wish that we had shut it down sooner but I believe that we have now got the right approach in place … that guarantees we’re only supporting students in courses with the likelihood of strong employment outcomes.”

Senator Birmingham said loans would now only support legitimate students to undertake worthwhile and value-for-money courses at quality training providers.

Only courses that meet industry needs and are highly likely to lead to students getting a job will be eligible for government-funded loans.

Courses will be sorted into bands with fees covered by the government capped at $5000, $10,000 or $15,000 depending on delivery costs.

Some trainers have been charging $30,000 or more for courses.

Senator Birmingham expects the new caps will lead to lower prices.

Public VET providers, including TAFEs, will automatically be able to offer the revamped commonwealth loans but all private providers will have to reapply to be eligible.

Private providers have largely been behind the massive increase in VET enrolments, with government loans blowing out from $325 million in 2012 to $2.9 billion in 2015

The government’s plans also include:

* Bans on using recruitment brokers or cold-calling potential students;

* Requirements for students to log in to an online student loans portal to ensure they are active and legitimate;

* A much higher bar for providers that want to offer government loans, including examining their relationships with industry, student completion rates, employment outcomes, and track record as education institutions;

* Stronger compliance conditions including paying providers in arrears and the ability to cap provider loan amounts and student numbers; and

* Powers to stop poor performing providers from using the loans scheme and to cancel their payments.

Senator Birmingham wants the new system of VET student loans in place by the start of next year.

That means he’ll have to steer legislation through parliament quickly, with just five sitting weeks left before the end of the year.

TAFE Directors Australia head Martin Riordan is worried there still won’t be enough transparency.

“We’re seeing really the rules change but still the same umpires,” he told ABC radio.

Mr Riordan is pleased public providers will not have to reapply for accreditation but noted all the new rules would still apply to them.

However, the sort of consultation the sector expected ahead of such a major overhaul hadn’t happened.

“We’ve invited minsiter Birmingham to TAFEs and there’s been no response; we’ve written to him asking for even in camera consultation, even in private colleges – no response. And now I think the best we received was at 35 minutes to midnight last night we were simply given by a junior staffer a copy of a media release,” he said.

“I just don’t think it’s quite the way to treat 1.8 million students.”

The Australia Education Union said the government’s moves appeared to be a first step to “restoring sanity to the way we fund VET”.

Prime Minister Malcolm Turnbull said the system required root-and-branch reform and had to be scrapped.

“This has been a series of rorts, it has to be brought back to a scheme with integrity,” he told reporters in Sydney.

“Regrettably many of the students that were being taken advantage of were, are indigenous Australians.”



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