Why income contingent loans are vital to Vocational Education and Training

There has been a lot of bad press over the pass few months about the problems with the VET FEE-Help system.  I myself have criticized the activities of some brokers and RTOs who have been at least in the opinion of a vast number of people using the system inappropriately and unethically.  However amidst all of these criticisms it is important to remember something.  The VET FEE Help system like FEE Help for Higher Education is a vital and necessary part of the how vocational education and training in this country should be delivered and paid for.

Now I know that there are going to be people out there who yell instantly that education is a right and that education should be free to whoever wants to undertake it, and to a large extent they are right, well at the very least about the first part of the proposition.  Everyone should have equality of access to education, they should be able equitably to access whatever training and education that they desire as part of their life goals.  The problem is of course that someone somewhere has to pay, be that the individual, organisations or the government, at some point there needs to be an accounting and the costs associated with the delivery of education need to be met.  Now it is also important to note that it doesn’t matter how this education is delivered, whether it be through publicly owned entities like TAFE or private, enterprise and not for profit providers, there is still a cost which needs to be met.  Now given that there is always going to be a cost somewhere in the system and given the amount of people in this country who wish to undertake post-secondary education, it seems at least to my mind difficult to suggest that on an ongoing basis we as a country could afford to fully fund the educational whims of everyone.  This in turn then of course means that we need to come up with a range of systems around how it is possible for us as a country to allow for equitable access to education for all those who wish to undertake it by simply ‘paying’ for such education, while at the same time, not damaging ourselves economically, severely limiting the choice students have to courses or providers or radically altering the quality of the outcomes produced by the system.

This is of course where income contingent loans have a vital part to play, in conjunction with direct government funding for courses and programs which are seen to be priorities.  Income contingent loans have been a vital part of the Higher Education landscape in Australia now for a significant period of time and have allow a wide range of people to enter and complete University programs to the highest levels, who would never have been able to undertake them had these loans not been available.  I myself would not have the degrees and the knowledge that I possess, nor it could be said the enjoyment of the life I now have, had it not been for my ability to study, a subject that interested, me through the assistance of an income contingent loan.  My degrees sit in an area  which would not ever make it onto a government priority funding list.  I studied Philosophy and Ethics and in particular professional ethics, research ethics and Bioethics, not subjects known for their ability to attract government funding for those people who wish to study them.  However because of income contingent loans I was able to study an area which I found stimulating and interesting and which has even if indirectly provided me with most of the roles I have had over my working career since I completed my studies.

Without income contingent loans, there would be a massive segment of Australian Society who would miss out on being able to access education and training.  It is simply the case that for most Australian’s coming up with a fee of even $5,000 to undertake a course of study would not be something they could do easily, or without going into debt in some other way, such as credit cards or the like.  Systems like VET FEE-Help allow equitable access to education.  They provide a way of reducing the stratification which occurs within society when education is only available to those with enough resources to be able to pay for them directly from their own pockets.

So the question then becomes does the value provided by programs like VET FEE-Help in terms of equity of access to education out-way the problems associated with them?  For me the answer is clearly yes, however this does not mean to say that we do not need to work as hard as we can to ensure that students, employers and the nations are getting the best possible outcomes from the system and that those organisation who seek simply to profit through inappropriate,  unethical and in some cases illegal behavior should not be stamped out by the full weight of the law.


Anyway that’s just my opinion.


About pauldrasmussen
Paul Rasmussen is one of Australia’s most widely read Vocational Education and Training Commentators. He provides deep, unbiased analysis and insights not only on topical issues, but also on the underlying structure and policy which supports the industry. His writing and analysis has been praised for its uncompromising and thought provoking style and its ability to focus on the issues of real importance to the sector. He has advised various government departments and ministers, training providers, public and private organisations, not for profits and small to medium enterprises on the VET sector and the issues and opportunities facing it. He is one of Australia’s most awarded learning professionals and a regular speaker at a range of conventions and forums. His extensive experience in vocational education, and learning and development coupled with formal qualifications in philosophy, ethics, business and education management allow Paul to provide a unique view of the road ahead and how to navigate it.

6 Responses to Why income contingent loans are vital to Vocational Education and Training

  1. Graham Hedley says:

    Another well balanced commentary Paul. We all hear the continuous rhetoric that VET is the key to more efficient and innovative workplaces.
    Unfortunately it has fallen to a commodified, “user pays” system where those seeking to up-skill have to purchase a product in the hope that they can take that to market to gain employment or enhanced opportunity.
    The ensuing risk for repayment (or not) of the subsequent income contingent loans is held ultimately by the (government) – read – tax payer, or the re-payer.
    I suppose it does pose the question that – if ultimately industry is to gain from an enhanced employment pool, is there an opportunity for some input there?
    The other issue is that the current system in most (not all) cases forces candidates into Diploma level study and subsequently generates the proposition of lower level qualifications being added – Diploma level in many cases is not ideal for those who have “slipped through the cracks” in the schooling system and seek to gain qualifications to enhance employment opportunities.

    • pauldrasmussen says:

      Graham. Thank you and I agree with what you are saying, there has been a level of commodification where a qualification is viewed as a product that a student requires in order to be able to attain a certain (or any) employment role. This has been created by unfortunate marketing practices which have strongly linked qualification to employment outcomes, when we know that at least for a range of programs the linkages are not that strong. While I also take the point that only having these schemes available for those programs at diploma level or above I have reticence towards the proposition of lowering these schemes to Certificate IV or even lower level qualifications. One reason for this is that it would seem that this approach would push up the overall costs associated with lower level qualification. The other reason is that entry level qualifications, particularly those within priority areas are certainly those programs which at least in my opinion should be funded directly by government.

      • Graham Hedley says:

        Agreed Paul. I would like to see a pathway program for those who are currently enrolling in Diploma programs that they don’t need because of the funding/loan model.
        I neglected to factor in the “money grab” that we have seen with $15K 8 unit Diplomas.
        I would still like to see some discussion regarding some industry contribution in identified skills shortages.
        There has also been a lot of discussion about the funding/future of TAFE. I see a potential opportunity here for TAFE to fill this role with funded programs and negate the free market price blowout factor.
        I have been working in the VFH market for some time now and have first hand experience of students genuinely trying to fill the void in their current skill/education levels at an unnecessary level because of the funding model – and yes they are paying a premium!
        It is clear that the school system fails many and many fail themselves for any number of reasons. Perhaps emancipatory educational models are the niche TAFE can fill very successfully at fair but pre-determined pricing models?

  2. Joseph Sanders says:

    I tend to look at some of these issues from the students’ perspective.Paying to obtain a qualification is,I think,undertaken with specific expectations in mind.In many cases the expectation is that it will lead to employment/enhancement in their chosen field.Hence acceptance of the relevance and quality of their studies is non-negotiable.Therefore I think the process of selection of would be students warrants a very robust model.I also believe that there needs to be a closer nexus between what is prioritised on the supply side,and what is prioritised on the demand side.I agree with the observation that Industry must be more closely engaged,particularly at entry level.My main concern is inadequate risk management of VET funding.

  3. Great content. VET has helped a lot of people in Australia to land a job. I don’t have any concern about the cost related to training. Everyone should worry about is the quality of education that organisation is providing.

  4. Erik Salonen says:

    Good post Paul.

    Totally agree with Joseph that someone undertaking such development is doing so with the expectation that it will lead to employment or promotion in their area of employment. In this case I don’t agree that an employer should contribute, unless the employer is requiring the individual to gain the qualification. If it is a targeted program to address identified skill shortages that is supported by government (e.g., Productivity Places Program, NWDF and other iterations of these funding models) then yes employers also need to contribute. VFH, I feel, is about the individual undertaking their own development (without the helping hand of a broker potentially putting individuals into qualifications they do not understand, do not need and possibly did not know they enrolled in).

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