Some comments on the VET FEE HELP emergency measures

So as a lot of us has been saying for some time now the VET FEE HELP system is broken.  The fact that it is broken and far to open to abuse, should not be taken to suggest that there is anything wrong with the concept of utilising income contingent loans to provide a vehicle for those students who for what ever reason fail to qualify for direct government funding.  Conceptually income contingent loans are a fantastic idea.  The problem is that the current system for administering these loans either simply doesn’t work or has been badly administered or applied.  For what ever reason though, what remains is a mess, a mess that putting any kind of party politics aside simply needs to be cleaned up.  Both the previous Minister for VET, Senator Simon Birmingham and the currently Minister Luke Hartsuyker, should at least in my opinion be applauded for taking steps to address these issues. In particular I think Senator Birmingham deserves recognition for his work in guiding the sector through this troubling year.

But enough of that, lets look at the so-called ‘emergency measures‘ that Minister Hartsuyker announced yesterday.  The first is the limiting of claims to 2015 levels.  While this has been criticised by some at least what it does is close the flood gates.  It will give the government a relatively solid maximum dollar figure for the next 12 months. Yes it does mean that someone who claimed $50 Million last  year will still be able to claim that amount this year, when you add to this the ability to place providers on a payment in arrears based on actual enrolments rather than estimated enrollment, plus making it easier to pause or withhold funds, it should allow the government to better control the system and to deal with anomalies and problems as they arise .  Tightening the reigns on new providers into the system is also a good thing.  I have long said that unless providers have been around for at least 5 years they should not have access to the system.  There needs to have been a history of providing high quality training in order for a provider to be able to qualify.  Add to this some form of capping of loan levels, as I have said previously I struggle to see a reason for people to be charged in excess of $10,000 for Diplomas and Advanced diplomas, and I think things will start to calm down.

While I agree in principle with the sentiments of Rod Camm from ACPET that perhaps a risk based approach would have been better than a freeze of funding levels approach, I think that a risk based approach is something to be unpacked as part of any reshaping of the program for 2017 onwards.  In the shorter term I think the current approach has a greater appeal as it does allow the government to limit runaway funding in a much easier way.  I think a tight risk based approach is the way forward along side in arrears payments on actual enrollment numbers, (I would personally prefer a completion payments models as is often used with direct funding), where numbers of students enrolled is a critical risk factor, because as we have seen from the data, in general it has been the providers with the largest numbers of students, and therefore the highest amount of loans,  who seem to have had the most difficulties with the system.

As far as the call for a training ombudsman goes, while I think the idea has merit and should definitely pursued, I don’t think again in the short-term it is going to make all that much of a difference.  Certainly as part of a longer term reform plan yes definitely have an ombudsman, but lets just get some measures over the line first that might at least start to slow down the hemorrhaging which is currently happening.


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 Some comments on the VET FEE HELP emergency measures

  1. Ariah says:

    Interesting article Paul. I do have to disagree on the “I struggle to see a reason for people to be charged in excess of $10,000 for Diplomas and Advanced diplomas”. If its a Diploma of Management or Accounting (12 months part time study) which is very easy to do in any office environment or at home, then I agree wholeheartedly, however if you look at something like an Advanced Diploma of Natropathy (2 years full time study), which has a huge practical component and a large amount of clinic hours attached to it (which some colleges provide a clinic for the students to work in) then the figure of $25,000 actually makes some sense.

  2. Boris Kelly says:

    Thanks for the post, Paul.

    I question the timing of these ’emergency measures’. Clearly, the amendments to the legislation have been squeezed into the final sitting days of the parliamentary year and have been easy to sell under the broad banner of reforms designed to clean up the sector. The fact that Labour and the Greens have a bank of political capital to spend on this issue at the government’s expense was no doubt another factor in the timing. However, I suspect there is also an element of panic in the government resulting from the scope of both the problem and the implementation of solutions.

    I believe the Department of Education and Training staff managing the reforms are struggling to cope with the workload that has resulted from both the reform agenda and the failure or imminent failure of high profile, high volume providers. I commend the staff at TS Enquiries and HEIMS Data for their patience and professionalism in our dealings with them but I feel their pain, as it were.

    In my opinion, the government has over-reached on the implementation of the reforms and the freezing of loans at 2015 levels will inevitably cause harm to a majority of quality providers and their students. I recommend reading this excellent open letter to Prime Minister Turnbull for a useful summary of the potential fall-out of the freeze

    The government has had at its disposal a range of sanctions and other legislative levers it could exercise to deal with the misbehaviour of the relatively few providers who have indulged in unscrupulous and unethical practices. But instead of dealing with the issues in a measured but firm manner, the government, and ACPET for that matter, have effectively boosted the avalanche of negative publicity surrounding provider defaults, fraudulent actions and poor behaviour. The effect has been to indiscriminately tarnish the entire private tertiary education sector under the punitive flag of ‘reform’ and place a greater administrative and financial burden on those who have done no wrong. To make matters worse, any measured criticism of the reforms or their implementation runs the risk of falling into the binary basket of “you’re either with us or against us” rhetoric. The “law and order” trumpet is the easiest and weakest tool of public relations management.

    I do applaud the work of Minister Birmingham whom I believe has all the intelligence and deftness required to manage the situation. However, he came to the task as Assistant to the Minister of Education Pyne during the crusading months of the still-doomed higher education reforms and has had to now recalibrate the response to the challenges in his portfolio along with new Assistant Hartsuyker. I wish them well because the immediate future of education rests with them. Unfortunately, a panic attack before Christmas sold as a big stick to beat up the bad guys is likely to have detrimental, unintended consequences.

    I support the broad intention of the reforms and our college will, of course, do whatever is required to maintain our high standards of fairness and ethical practice. There is no doubt that structural change is required in many areas of VET, not just in the FEE-HELP space. I do, however, seriously question the political management of reform implementation and can only hope that some clear-sightedness and balance arrives with the new year.

  3. Ann says:

    Well said Boris Kelly

  4. Neale Price says:

    Paul et al, the definition of emergency is a serious, unexpected, and often dangerous situation requiring immediate action. After many months (and possibly years) the use of the term emergency is drawing a long bow at this situation. Yes, the system is broken and many fixes have been suggested by industry (used in the broadest sense) but yet we have negligible “action”. There MUST be a political will where ASQA, Dept of Education, ATO, ACCC can put together their collective heads and reach an agreed conclusion that will provide someone with enough power to ACT on this situation before the current and future tax payers of Australia have even more debt to repay. So therefore Boris I am agreeing with both you and Paul. There is a need for change…now we just need that driver to stand up and take control.

  5. Janice Havington says:

    My $0.02 worth.

    The onus for VFH is currently on the students – once they sign up, they have to formally withdraw before a census date. This should be flipped.

    The onus should be on the VFH provider to prove that the student actually commenced and kept attending – just like funding evidence of participation requirements.

    We should scrap the Unit of Study construct and just report Units of Competency. There should be maximum amount allowed to claim per qualification and for amounts over that, the student should be expected to pay.

    There should be a requirement for an abandonment policy. Payment should not be paid in advance for students who may or may not start their study and may or may not formally withdraw.

    Payment should be split into two: upon the student reaching the milestone of the first census date and a final payment made upon completion of the unit (not unlike the Qld fudning model).

    Evidence of participation should be required similar to those requirements in Victoria.

    Computer loan schemes should be provided by the gov’t – eliminating the need for those to be provided by the RTO.

    Each UoC should have it’s own census date (as per WA’s funding requirement) and there should be a maximum cap of the cost per Unit of Competency and a maximum cap of Units of Competency allowed to be studied at any given time. There should be a requirement that there be a minimum of four census dates per course per year.

    Students should only be allowed to enrol into a maximum of two VFH courses per year (similar to Victorian VTG constraints).

    The census date must be set at either 20% of the calendar time to complete the UoC or two weeks from the date the student commences the UoC – whichever is the longer time period.

    The CAN must be issued within 10 days of enrolment and prior to commencement and show all units and census dates – not within 28 days after the first census date.

    In addition, there should be a government website where the student must create a login and do a video recording confirming that they accept the terms and conditions after watching a short video explaining the basics of VFH loans. This should be very easy in this day and age of smart phones.

    This should include the student reading out information displayed on screen about the repayment threshold.

    The video should require them to hold up their state or federal ID and also the VFH brochure as evidence it has been provided.

    The brochure should be rewritten to be more student friendly manner – it’s got room for improvement.

    State or Federal ID should be required to be collected from a defined list (as it is required in some states by funding bodies).

    Brokers and their agents must be registered with the dept and relevant state and federal ID must be forwarded to the department electronically. There should be a ‘blacklist’ that RTOs can check for brokers and agents on a central database for brokers and agents that have had their registration revoked or sanctioned.

    The RTO must be required to outline the costs of delivering the course. The intended profit to be made from VFH loans must be clearly defined and so must any brokerage rate.

    Permanent Humanitarian VISAs must be clearly defined and listed on the DET website.

    The repayment threshold should be reduced.

    The government form should be scrapped and rewritten in a student friendly manner – the current form is more like a mortgage form and is difficult for the average student to understand (yet alone some of the sales staff).

    They should call it the VET Help Student Loan scheme.

    The freeze should not apply to providers who have been audited and found to be compliant.

    A government letter should be sent to the student upon reporting of each Unit of Competency and the amount of debt that they have incurred to date with information on how to advise any incorrect details.

    The department should require yearly desktop audits and site audits every 1-2 years based on the risk-rating of the RTO. This should include phone surveys of students (which they now do in Victoria).

    There should also be a requirement for the RTO to have a separate and clearly defined section on student loans accessible from their home page and this should include links to the gov’t website with key VFH videos and online versions of the brochure and repayment information.

    These measures won’t stop the truly dodgy providers, but at least we are making it harder for them and easy for compliant providers to continue doing excellent work.

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