May 27, 2015 4 Comments
Firstly this is not an attack on the Educational Brokerages in Australia, it is more of an explanation and discussion on how the system works and why.
Everyone complains about Facebook, almost all of the time. They complain about changes to the interface, the way it deals with what turns up in the news feed, how many ads they see, what the company does with all of the data it collects and who actually owns that data (I will give you a hint it’s not you). The problem is that all of these complaints and issues grow from a mistaken belief about the place of Facebook users in the grand scheme of things. As a lot of people often suggest if you want to find out why things are being done in the way they are being done, follow the money. So if we follow the money in relation to Facebook, we quickly realise that Facebook users are not in any real sense of the word Facebook clients, they are in fact simple objects within a data set and consumers to be advertised to. Facebook’s real clients and the people who they are really trying to keep happy are their advertisers who generate all of the income for the site and their shareholders. Now while it is true that if you have happy consumers you are probably more likely to generate better income, when you have a billion users a lot of people have to not only complain, but stop using the system before the company would take notice.
So if we apply the same logic to the Educational Brokerage sector in Australia we can quickly see what is happening. In fact all we have to do to find out who is important to these organisations is to ask a really simple question, which is of course, who pays them? The answer, of course, is equally simple, they are paid by training providers to provide them with students. So the income stream for brokers is tied completely to the continuing recruitment of students for their client RTOs. If there client RTOs are unhappy or there are not enough students, or the costs are to high, or compliance issues start to impact and they leave the relationship, then the broker either has to find other clients or increase the number of students being recruited for the clients it still has to address the income shortfall.
Make no mistake however, as is the case with Facebook users, potential students are not the clients of brokers, they are simply the consumers of the service they provide. They are in reality very little more than a product with a certain value attached to it, which is generated when they are ‘sold’ to a provider. The value of a can of beans to Woolworths is that someone will pay money for it. The value of a potential student to a Broker is that someone (a training provider) will pay money for them. The more money a provider is willing to pay for a student the more value that student has to broker.
Now to be fair this should not be taken to suggest that potential cash value is the only driving motive for brokers nor it is to suggest that potential students don’t have a cash value for RTOs who don’t use brokerage services because they certainly do. It simply suggests that as with Facebook the person who does not pay for the ‘service’ in this case the student is always going to be a secondary concern to the needs of the person who pays the bills, in this case the training provider. When we add to this the concepts of the Brokers themselves being independent contractors, and or working either entirely or partially for commissions, we can easily identify the pain points within the system.
Is someone working on commission going to recommend a Cert III or IV course to a student which might generate $600 worth of income or is there the temptation to recommend the diploma level course which will generate $3,000, particularly when the RTOs (who remember are the ones paying the bills) might make $15,000 from the Diploma course as opposed to $3,000 for the Certificate IV. Again it is important to note that I am not saying that this is the driving force behind all of these operations, but when we start looking at the money we can see why people might prefer to recommend a Diploma over a Certificate IV or even utilising VET-FEE HELP over accessing direct government funding. As someone from a brokerage said to me a while ago, ‘our business is recruiting diploma students, it is up to the individual to decide if it is the right option’. Now while this is true, I would suggest it is also true that even for people who are deeply involved in the VET sector funding arrangements can be complicated to say the least, and for a potential student having a ‘personal learning consultant’ recommend undertaking a Dual Diploma of counselling and community services, which they don’t have to pay anything for up front, becomes an easy thing to agree to because well it sounds good and seems much easier than trying to figure out the morass of funding available.
So here is a question for everyone to ponder. What would the role of the broker be if the person who was paying them was the student, if their income was generated by creating the right result for a potential student rather than being driven by the training provider?