Much of the taxpayer investment in vocational education via the VET FEE-HELP loan scheme is “currently being wasted, or milked for profit”, a Senate Inquiry has found.
VET FEE-HELP student loan debts have gone from $25 million in 2009 to an expected $4 billion in 2015.
The Senate Standing Committee on Education and Employment’s report on the operation, regulation and funding of private vocational education and training (VET) providers in Australia calls for an immediate review into the operation and regulation of VET FEE-HELP, “given the rampant abuse, accelerating costs and doubling of bad debt”.
The report states: “...access to a loan scheme enabled students to pay more, which in turn allows providers to charge more with the knowledge that the Commonwealth Government is ultimately responsible for the loan paying of the course”.
“The combination of contestability [for government VET dollars] and student access to VET FEE-HELP has encouraged the market to maximise profits,” the report also states.
The report notes the Workplace Research Centre at the University of Sydney’s submission: “Based on the results of the publicly-listed for-profit providers, the for-profit VET sector appears to sustain profit margins of around 30 per cent. This indicates that every dollar of public subsidy paid results in 30 cents of profit for distribution to the company’s shareholders.”
Also, the Australian Council of Commerce and Industry’s submission to the inquiry: “There is no doubt that course offerings and training behaviour is driven by government funding provisions…the needs of students and employers are not always the top priority for some training providers.”
The Senate committee recommends the review considers the most effective way to limit provider access to VET FEE-HELP so that only providers with the highest reputation for quality have unfettered access to the scheme.
The inquiry found that controls on providers have been “unacceptably loose” and there is “no effective price control” in the private VET system, and recommends the Australian Skills Quality Authority be given sufficient powers to adequately regulate the VET sector, “to protect the rights of students and to act more firmly and quickly to stamp out abuses”.
The report also notes: “numerous concerns expressed to the committee and in the national media about the quality and relevance of the education and training students accessing the scheme are receiving.”
Federation Deputy Branch Secretary Maxine Sharkey said the findings of the Senate inquiry are consistent with the evidence given to the NSW Upper House inquiry into VET.
“NSW is blithely following down the path of the VET funding model of the other states and territories, with its Smart and Skilled policy, even though the Senate inquiry clearly demonstrates it is detrimental to VET students.”
Federation President Maurie Mulheron said the report showed all the more reason why the NSW Government should start reinvesting in TAFE.
“The NSW Government should stop the closure of colleges, the cutting of courses and the increases in TAFE fees,” he said.