Government moves to eliminate rorting following loans scheme blowout 

Oct 16, 2015  |  News  
The Government has moved to eliminate shonky training providers following the release of a damning Senate Inquiry into its troubled vocational education loan scheme.
  
The scheme has blown out by 150% over the past year and been blamed for encouraging unscrupulous private operators to rort the system by luring vulnerable students into expensive courses they are not suited to study. 
  
Minister for Vocational Education and Skills, Luke Hartsuyker, today introduced legislation designed to strengthen protections for students and push unscrupulous training providers out of the market.
 
The Senate Inquiry called for an immediate review of the scheme to address "rampant abuse" and "accelerating costs”, recommending a cap on the amount students can borrow and the introduction of ‘minimum hours’ standards for courses.
  
The Labour and Greens-dominated panel found the scheme posed an “unacceptable risk to the Commonwealth”.
 
The cost of the Vocational Education and Training (VET) loans rose from $699 million in 2013 to $1.76 billion in 2014.  It is estimated that around 40 per cent of them will never be repaid, meaning taxpayers will cover the cost of almost $1 billion in loans for the past year alone.
  
Mr Hartsuyker blamed the Gillard Government for failing to “put in place proper rules and processes” when setting up the scheme in 2013.
  
“The Government has acted swiftly to tighten the rules around VET provider marketing, the use of agents and the invoicing of student fees to better protect students and stamp out the unethical behaviour by that small cohort of providers doing the wrong thing,” he said.
 
“No longer can unscrupulous providers sweet-talk people into signing on to their courses with the offer of a free laptop or iPhone.
 
“No longer can providers hit students with extortionate withdrawal fees which meant that students felt they had no choice but to continue in a course.
 
“No longer can providers mislead students into believing that VET FEE-HELP is not a loan that is expected to be paid back to the Government”.
 
The Australian Education Union claims the changes fail to improve a flawed system in which regulators are under-resourced and enticements for unscrupulous operators remain.
 
“Fees in the VET sector remain completely unregulated, in total contrast to HECS fees for universities,” said spokeswoman Pat Forward.
 
“Regulators are overwhelmed and do not have the capacity or resources to enforce the regulatory standards which currently exist.
 
“The VET FEE-HELP explosion has created a goldmine for operators who mislead students or charge over-inflated prices for courses of minimal value. These changes still leave private providers free to offer courses that don’t meet the minimum hours offered by TAFE.”
 
“Three-quarters of loans are going to private providers, and this is channelling funds away from TAFEs.
 
“If we lose the quality, capacity and experience of TAFE, the standards of vocational training in Australia will fall.”
Changes included in the Higher Education Amendment (VET FEE-HELP Reform) Bill 2015:
  • A two-day cooling off period between enrolment and a loan application
  • Minimum course pre-requisites such as literacy and numeracy to ensure students can complete tougher courses
  • Requiring a parent’s or guardian’s signature before a student under 18 years can request a loan
  • An easier process for a student to have their debt cancelled where they have been signed up for a loan inappropriately -  and for the Government to recoup the cost from providers
  • Minimum registration and trading history requirements to ensure new providers have a proven history of delivering quality training
  • Infringement notices and penalties for breaches of the VET FEE-HELP Guidelines
  • Technical amendments to strengthen the scheme’s administration and to monitor and enforce compliance