Sunday, January 3, 2016

Student Loans Tightened for Australian Vocational Educaiton

The laws governing the Australian Vocational Education and Training student loan scheme (VET FEE-HELP), have been tightened. Some measures came in mid 2015 and others as of 1 January 2016. This is to counter rorting of the system by Registered Training Organizations (RTOs). It has been estimated that 40% of student loans will not be repaid. This is unfortunate, as the VET system provides a useful alternative, and stepping stone, to university degrees. The new regulations are unlikely to be sufficient and I suggest that student enrollment for courses be centralized via a government website to allow for better enforcement.

Inducements to students banned: Inducements, such as free laptops for students, were banned as of 1 April 2015. Also RTOs and agents are not to market training via a VET FEE-HELP loan as “free” or “government-funded”. However, it is not clear how this is to be enforced, particularly where RTOs use agents to recruit students.

As an example of the difficulties with encouraging students to think carefully before enrolling, when I typed "diploma of computing" into a web search engine, the first link was headed "VET FEE HELP Courses", having the appearance of an official government announcement, but actually being an advertisement for an RTO. The RTO's website offered "study now -pay later" and "no pre-requisites", with a link to "Enroll Now". The enrollment form had no mention of the cost of a course. To obtain a "Free Course Guide" the student is required to provide their telephone number and only after providing it are they told a "course advisor" will call to discuss their study options. It is only after providing contact details can the student see the cost of the course, on the second last page of a PDF downloaded document.

A search for "diploma of education" produced a similar result, with a link headed "Vet Fee Help Diploma", which was an an advertisement emphasizing the government loans "if you're an Australian citizen you don't pay anything until you're earning over $54,126 a year" and intimidate application, with fees not quoted.

The government's My Skills Website provides useful information in a format which makes it easy to compare providers. But it is likely that many students will instead click on a link in a web search, think this is government endorsed and enroll with that provider. The Australian Government should centralize the enrollment process, via their own web site. In this way, students could be presented with information about the costs and alternatives, before they apply. Only then would their details be passed to the RTO they select.

Student debt incurred with course delivery: As of 1 January 2016, VET providers are banned from levying the entire course debt upfront. The tuition fees must be over at least four fee periods. Students can withdraw early from a unit, before the "census date" with no withdrawal fee. This is likely to be the most effective measure and easiest to enforce. Students will be able to withdraw from studies when they realize the course is not suitable. However, this assumes students are actively engaged in their studies. With blended and particularly on-line courses, a student may be in a state of denial, where they do not want to admit they not progressing and so do not want to withdraw from a unit.

Pre‑requisites for courses: From 1 January 2016, VET providers are required to publish on-line an Entry Requirements Procedure. The minimum requirement for diplomas will be Year 12, or equivalent. Providers must assess each applicant and the Australian Skills Quality Authority (ASQA) verify this, hower the details of how this will happen are unclear.

VET has traditionally been a more open form of education that university, with lower requirements and experience being accepted in place of formal qualifications. One problem inherent in the VET FEE-HELP system is that it only applies to a minimum of a Diploma qualification. Students cannot obtain a loan for the shorter courses (such as a Certificate IV), which could be used for them to build confidence and demonstrate their ability. As a result some students may be denied higher education opportunities.
More training information: From July 2015, the MySkills website ( has been providing students more information about debt obligations, training providers reported by the regulator, outcomes for the most popular courses, average cost of courses. The MySkills website also now shows students feedback on courses and employment. However, it is unlikely this information will be looked at or have the desired effect on students. As an example, a more expensive course may be perceived as being of higher quality.

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