In his announcement earlier this month, federal Education Minister Simon Birmingham proclaimed the uncapping of sub-degree places in universities – a move that could be the death of diploma delivery by TAFE.
The sub-degree category includes diplomas and associate diplomas historically delivered by TAFE. Prior to the opening up of the contestable market, diplomas were set at a standard price, around $1200 per year.
The National Partnership for Skills Reform agreement between the federal government and the states in 2012 increased the cost of diplomas and opened them up to VET Fee-Help. Late last year, VET Fee-Help was replaced by the VET Student Loan Scheme but both are income contingent loans, like HECS.
The major difference between the two fee schemes is that the former had no cap on what a training organisation could charge for a diploma (so there are examples of $50,000 hairdressing diplomas) whereas the VET Student Loan Scheme caps the cost at $5000, $10,000 and $15,000, and the minister can waive the cap for high-cost course delivery.
TAFE will suffer because of the difference between the administration of the HECS and the VET loan schemes: HECS places are subsidised by the federal government (around 60 per cent) so students pay only 40 per cent of the course cost. Delivery of courses covered by VET loans is not subsidised by governments so the student pays the full cost.
To put this more clearly, university students pay 40 per cent while TAFE students pay 100 per cent for the same course. To add insult to injury, the student who takes up a VET loan must also pay a 20 per cent administration charge on top, so now they are not just paying 100 per cent of the cost but 210 per cent.