Monday, February 5, 2018

Non-government Student Loans for Vocational Programs

Australian startup company Study Loans Pty Ltd is offering loans to students for 6 to 48 months. Rates are 12% to 18% depending on the students credit rating and the education provider's track record. This compares to zero interest on a government VET Student Loans.

No interest is charged on government loans, but they are indexed to the CPI and so the amount to be repaid can increase, depending on inflation. Also the range of providers which students can apply for government loans for has been reduced, in response to poor performance by some providers. So there may be scope for a commercial alternative.

Study Loans Pty Ltd provide a loan calculator, so students can get an idea of the cost. However, the default settings are for 24 months repayment. Students on low incomes may have difficulty with repayments. Increasing the repayment to the maximum of 48 months considerably increases the interest to be paid.

Student Loans Pty Ltd is currently offering loans for courses at 38 education partners. Most of the partners are Registered Training Organizations, offering courses also available at other commercial RTOs and government TAFEs. As an example "Academy of Makeup" offers the  a Diploma of Screen and Media-Specialist Makeup Services (CUA51015). Other providers, such as General Assembly and The Plato Project, appear to be offering courses outside the RTO system.

By focusing on a small range of providers and carefully monitoring student progress, Study Loans Pty Ltd may be able to improve on the success rate of the government loans system, proving a better result for both the students and the company. However, there may be some downsides to the Study Loans Pty Ltd approach, in terms of cost and recognition of qualifications.

Government TAFEs generally charge lower fees than commercial VET providers for the same nationally standardized qualification. As an example, Academy of Makeup's Diploma of Screen and Media-Specialist Makeup Services (CUA51015) is $11,900. The same standardized qualification is $4,060 at TAFE NSW: just over one third the commercial provider's fee. Of course, the student may consider the extra cost for a commercial provider worthwhile, if it provides a superior education (or the student can't get into TAFE).

Student Loans Pty Ltd also partners outside the RTO system. Students may prefer a provider who offers something different to the homogenized, standardized VET programs. But the students may find their qualifications not recognized by industry, or by educational institutions.

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