Student debt is being fuelled by privatisation

Fears that 40 per cent of VET FEE-HELP loans will remain unpaid due to lack of jobs and low wages for vocational education and training (VET) graduates are raised in a Senate Education and Employment References Committee interim report.

“Such a high level of bad debt in effect functions as an additional subsidy to providers as the cost is borne by the taxpayer,” the report states.

Federation Assistant General Secretary (Post School Education) Maxine Sharkey said there is no limit to the amount private providers can charge students.

“There are also no minimum hours of instruction,” she said.

“An unregulated VET market hasn’t worked in other states and won’t work,” she added.

The Senate committee has flagged interest in “exploring the economic and social costs and benefits associated with for-profit diploma and advanced diploma qualifications”. It notes Australian Education Union-commissioned research that in 2014 the VET-FEE funding to for-profit providers was $592.6 million compared with $177.5m for state-administered TAFE institutes.

The committee is concerned about the link between an increase in targeted marketing and private providers’ access to government funds. Government funding to non-TAFE providers increased 260 per cent (to $1362.8m) over the five years to 2013. This figure was “horrendous”, Ms Sharkey said.

The Senate Committee is also worried about targeted marketing by some for-profit providers that “de-emphasises the real cost of undertaking VET and misconstrues the costs associated with VET FEE-HELP”.

The committee intends to hold public hearings as part of its investigations and a second interim report is expected by June 15.

Reforms announced to deal with 'dodgy' practices

Legislative and other changes to deal with rogue training providers and better protect students were announced by Assistant Minister for Education and Training Senator Simon Birmingham on March 12.

“[VET FEE-HELP] assisted over 180,000 students last year with more than $1.6 billion in loans, but unethical behaviour by a small number of training providers or their brokers meant too many students were signed up for courses that didn’t meet their needs or lead to job outcomes, but instead saddled them with significant debt,” the Senator said.

He said the measures include:

  • banning providers from offering inducements or incentives to students, like cash, meals, prizes or laptops, to get them to sign up to courses that they don’t need
  • requiring courses to include a minimum number of units of study
  • requiring students to be provided with clear information that helps them understand that VET FEE-HELP loans are real debts that impact their credit rating and are expected to be repaid.