What would a cap on VET FEE HELP loans achieve?

There has been a lot of talk during this election campaign (relax everyone it will all be over on Saturday) about reforms to VFH and in particular the Labor idea of capping VFH loans at $8,000.  I thought today I might have a little bit of a think about what this might do, how it might effect the sector and more importantly how it might effect prospective students trying to undertake Fee for Service Training (which is what VFH is for)  if Labor is successful at the election and implements this policy.

Before we have a look at this idea there are a couple of things that it is important to know about VET FEE HELP (VFH).

  1. VFH is not government funding
  2. VFH is an income contingent loan, from the government to the student
  3. VFH is designed to assist student not eligible for government funding to access training
  4. VFH is therefore a loan to cover the costs of FEE for Service training
  5. There are less than 300 VFH providers across the entire VET sector
  6. Not all VET courses cost the same to deliver.

Why are these things important to know before any discussion of caps on VFH loans can be undertaken?  The reason is simple, VFH is aimed at a very particular market, a market which up until its introduction were forced to find ways to fund the training they wanted to undertake without (in most cases) any government assistance.  This meant that potential students needed to utilise credit cards, personal loans and other forms of credit or payment plans to facilitate their ability to undertake higher level courses, in particular those courses which were not viewed as high priority by the various state governments or where the student didn’t meet the eligibility requirements for direct funding.

To give you an example.  In Queensland the State Government provides funding for the Diploma of Community Services where the potential student does not currently have a Certificate IV or higher and is currently working in the community sector.  A career changer who had a certificate IV in building and construction (about 8 years old), but due to injuries and other issues wanted to transition from that sector to the community services sector.  They had secured a role with a community sector organisation but were not eligible for funding to complete the diploma.  As a result they needed to either fund the qualification themselves, get their employer to fund it or use the VFH system.  This is a very typical example of the kind of situation that legitimate users of VFH found themselves in.

Of course the easy ‘solution’ here, would be to say something along the lines of ‘well the government should just fund all vocational education for everyone.’  The problem with this solution however is the cost, or more particularly the cost vs outcome/benefit equation.  But that is an entirely different argument best left for another day.

Currently the average cost for a diploma of community services is around $10,000 (if you look around you can get a good quality program from around $5,000 and the most expensive is about $15,000).  If the cap as Labor envisions it sits at $8,000 that means that even for an average priced course the potential student would still have to find $2,000 out of their own pocket in order to be able to undertake the course.  This of course assumes that nothing would change if a cap came into force.

The real question here though is, is that case?  Is it really sensible to think that nothing would change if there was a cap of $8,000 in place for VFH loans? What are the various options that could occur if a cap like this was instituted let’s think about that for a moment.  There are some Diploma level courses where it can be legitimately argued that the costs of delivery of the course are more than $8,000 and therefore to successfully deliver the course and get the right outcomes course fees would have to not collapse back to the cap limit.  They may reduce somewhat, but not substantially in these cases.

There are also however, a range of diploma level programs where the costs of delivery and the fees being charged are not, I would argue in sync.  I and others have argued at length in a range of forums that it seems something around the $10,000 mark appears to be a reasonable figure for a wide range of Diplomas.  However, even if we accept the $10,000 premise and providers dropped their current offerings down to that level, as mentioned above,  it would still leave the consumer, the potential student needing to find $2,000 from elsewhere.  It has also been argued that not much has changed in terms of delivery and assessment of programs since VFH was introduced except the price,  so we will I think see a large number of those higher price providers drop their prices down to the limit of the cap.  We will also see premium services attempt to arise, where some providers attempt to set themselves up as a premium service (whatever that might mean) and charge accordingly.  The real question here is would a model of this nature work in a sector where essentially two qualifications are identical regardless of provider.

One thing I am really concerned about with a policy like this is the rise of something akin to Vocational Education credit providers.  I can see one of these online or payday style lenders seeing an opportunity and rebranding or marketing themselves as providers of VET loans to cover the difference between VFH and the costs of the course.

The question then becomes is this a good policy?  I can see the point of it certainly or at least why it looks politically attractive.  The problem is of course that as with a lot of policies around this sector it is a hammer, a reactive response designed to nail one problem without any consideration for any possible unforeseen fallout for everything else.  But hey that happens a lot around here doesn’t it.

So anyway that’s just my opinion.


Private VET doesn’t actually cost 7 times public VET!

As most of you know there has been a story doing the traps that Private vocational education costs 7 times more than public VET.  When I first saw this story last week it was just after the Queensland Budget papers had been released and according to the QLD figures which I looked at in my last post the cost to the QLD government of all funded training was around $525 per unit of competency, while the cost per unit of competency for TAFE delivered training only was $799 per unit of competency.  The average cost to the QLD government for a qualification across the board was around $3500.  Yet if we are to believe the figures quoted by The Greens and the SMH it seems that ‘Taxpayers forked out $73,200 per graduate from private colleges on average, but only $10,500 per graduate in TAFE courses in 2014‘.  Now when we look at these two sets of figures they seem to be diametrically opposed, one set of  figures, from the QLD budget papers seems to be suggesting that delivery by the non-public sector is at least one third more cost effective than it seems to be at TAFE (please read my last post as there are some important caveats on this).  The other set of figures seem to not just be saying the opposite but something exponentially opposite.  So which set of figures represents a true or truer image of the costs associated with VET be it delivered publicly or non-publicly.  Now to be completely fair, both sets of figures are both true and not true at the same time, and given the current media bias against the VET sector and the fact that The Greens VET policy is one designed to eradicate non-public VET it is no wonder that the headline private vocational education costs 7 times more than TAFE has been quoted in every paper around the place, with very little checking of the facts behind the statements.

Last week when I talked about the QLD budget I stressed that there may be quite legitimate reasons why delivery through the QLD public provider might in fact seem higher than non-publicly delivered courses.

When we look at the set of figures produced by The Greens, however we see something different, what we see is a packaging of data which shows a lack of understanding of both the data itself and the sector and then the use of this data  to not just cast blame where it is deserved, that is on those providers who were doing the wrong thing, but across the entire non-public sector as a means to support their policy on Vocational Education.  So lets take a look.

To start off, there are some very important pieces of information which are vital to being able to understand the problem with the 7 times assertion which most of us with the sector already understand and they are;

  1. VET FEE Help programs accounted for only 6% of all VET programs in 2014
  2. Only 5% of all RTOs (both public and private) are VET FEE HELP providers
  3. 43% of all VFH enrolments were done by the 5 largest VFH providers, Evocca, NSW TAFE, Careers Australia, Study Group and AIPE
  4. The 10 largest VFH providers account for 55% of all VFH enrolments
  5. The 4 largest VFH  providers each have enrolments double or more than the number of enrolments for the fifth largest provider

In fact if we are to simply look at those providers who have been or are being investigated by the ACCC we see that they alone account for $420 Million and if we add in the amount paid to Evocca the number approaches 3/4’s of a billion, out of a total spend of about $1.7 billion.

Enough background though, lets explore how exactly The Greens came up with their figure of 73,000.  Well that is easy if you download chapter 4 of the  2014 vet fee-help statistical report and you take the total VFH spend ($1.7 billion) and divide it by the number of students graduated (23,000) which gives you the figure that The Greens and there of course you have the first and one of the single biggest problems with the figure.  Anyone with the barest understanding of how VET data is collected and what it means knows that there is both a lag in the data and that in a lot of cases students take more than 12 months to complete a diploma level qualification.  What this means of course, given that payments are made on commencement of study not completion, a provider could have enrolled a student in all of the units associated with a course and been paid for those units well before the student has completed them.

So lets investigate this a little bit further though.  It seems to me when we look at the data mentioned above that The Greens may have made quite a serious mistake in terms of their calculation.  On sorting through the figures for both VFH fees and VFH completions, it looks like all of the TAFEs across Australia received a combined total of $257 million in VFH fees and there were 5755 VFH completions, which gives a cost per student of $44, 656 rather than as has been claimed something around $10,000.  Now if the people who did this work for The Greens or anyone else would like to challenge my numbers or show me how they got theirs I am more than happy to be corrected, but on the available figures from the department it looks like when you combine all of the TAFEs they got around $45,000 per student in VFH fees.

Now onto the next point.  As I said above vast majority of VFH fees were paid to a very small number of providers (7 providers out of 250 VFH providers) all of which have recently been investigated by the ACCC or other bodies around there student practices.  These seven providers account for around $750 million of the VFH fees paid.  As a combined group they graduated about 3030 students (It needs to be noted that I am simply using the method of calculation here that was used in the original report) which means that for this group the cost per graduate, in terms of VFH fees paid was about $248,000.  Now no shying away from this that is an appalling figure and unjustifiable in any realm of the imagination, which of course is why  investigations and prosecutions have or are in place around these providers.

However when we remove this very small group of providers from the total mix something very interesting happens to the figures.  The total amount of fees paid all non-public VFH providers excluding the seven in question (about 245 give or take) was about $691 million.  The total number of students graduated by this group was 14,800.  Now if we as we have done previously dived the total fees paid by the number of graduates we get, wait for it $46,600, about $2000 more than the figure for TAFE.

Now I need to be clear here, I am not defending in any way the unconscionable acts of a small number of providers or the very poor completion and progression rates of this same group, all I am saying is that to calculate things in the way the Greens have shows a lack of understanding of both how data is collected and how the system it self works and when the group of providers who were the largest users of VFH fees are taken out, the figure for non-public is well pretty much the same as that for TAFE (particularly given that I think the number for TAFE is much higher that what is being quoted by The Greens.   So really all this data  shows is what everyone has known for a while now,  5% of non-public providers who delivered VFH courses, seem to have done  the wrong thing and sucked up massive sums of money and now (at least for some of those providers) are being held to account.  I mean the way the Greens and the SMH cut it, it makes for a good headline but in reality that is about all it is.


Anyway that’s just my opinion.

QLD budget 2016 and the VET sector, some thoughts and snippets

Well it was QLD budget time yesterday and if we go to the main budget website we can see training and education right there on the front page highlights with ‘record funding for training and education of $12.9 billion.’  Now I have to admit that that sounds like an absolute wheelbarrow of money, but what is it that the VET sector is actually going to get out of that great big pot.  After digging through the budget papers, (for those of you who are interested, here are the more interesting of them  Budget strategy and outlook and service delivery statements) we see that not to much has changed and the QLD government as it has had a bit of a tradition of doing over quite a period of time has shown a good understanding of the sector and the needs of students and stakeholders.

So what are we seeing, firstly let’s look at the the funding arrangements;

  • User Choice Apprentice and Trainee Training Subsidy increase slightly from  $209 million to  $220 million
  • Certificate 3 Guarantee Tuition subsidy decrease from $152 million to $140 million
  • Higher Level Skills Tuition  Subsidy increase from  $54 million to $60 million

Now firstly you might thing hang on why is the certificate III guarantee going down.  It’s not, the reduction to $140 million is just a better indication of the demand for places under this program and with a $10 million boost to this to provide second chance funding to students who already hold a certificate III, there are not any real losses here for anyone. There is also the $60 million which forms part of the Skilling Queenslanders for work program, which while it is not directly part of the VET sector itself, does increase the number of students having access to training, which is always a good thing.

In addition there are some interesting little tidbits hidden away in the various parts of the budget as well that I think provide a bit of an insight into the sector, and are worth while looking considering;

  • The average annual dollar value of user choice subsidy per student is $2,532
  • The average subsidy value for Certificate III funding is $2,734, with the subsidy for each qualification ranging from $530 to $7,880
  • The average subsidy value for the Higher skills program is $4,281, with the subsidy for each qualification ranging from $2,130 to $11,060
  • The average total cost (to the government) per competency successfully completed is $525 (This figure is calculated by dividing the Training and Skills service area budget by the number of successful VET competencies (individual study units) directly funded by the department)
  • The average cost per competency successfully completed through TAFE is $776, with the 16-17 estimate being $799. (This figure is calculated from total expenses divided by the number of competencies successfully completed by students)

See I told you there were some interesting snippets of information did I not.  When we look at the information in the budget papers it seems to suggest that a unit of competency is about $275 more costly if delivered through TAFE than the average cost to the government of a funded unit.  Now we need to be careful with this information mainly because it may be the case that there are costs associated with non-public delivery (Student contribution fees, offsetting costs through fee for service training etc) that are simply not captured in this information and which may make the cost per unit very similar when calculated in.   What we can say however, from a purely economic and budgetary perspective, for the government, non-public provision of funded training is less expensive than public provision. Please remember though that that is from a completely economic standpoint and does not take into account, the high costs associated with regional and remote training, training for specialist populations, TAFEs high overheads (staff and facilities) and other considerations.

Importantly what I think we can take from this, is that non-public provision of funded training (at least in QLD) forms a vital part of the overall picture of the Vocational education and training sector and without the inclusion of non-public providers the costs associated with the delivery and assessment of VET in this state would rise.

So where does the VET sector stand in Queensland after the 2016 budget, in a pretty strong place I think.  When we roll in the Departments increased risk assessment strategies around PQS providers, a training ombudsman and Training Queensland, I think there is a very solid footing for the next few years to be positive.  The only hole on the horizon though is that the National Partnership Agreement runs out next year and no matter who gets into government federally this could in the long run result in wholesale changes, but that is 12 months away, we can worry about that later.

Anyway that’s my opinion.


A mission statement for Vocational Education and Training

Those of you who were at the recent VET Leaders congress at Edutech 2016, may have heard a forum discussion, that I was part of,  about the future of VET in Australia.  During the conversations I suggested that one of the things that we clearly need in the VET sector in this country is a clear vision, or a mission statement if you will.  There was some discussion about the problems of achieving something like this at a government, strategic level and that any kind of statement which was created at this level would be compromised to some extent by the agendas of various stakeholders.  Now while I understand this concern and have seen it happen at all levels of not just government, but private enterprise as well, I tend to think that it may miss the point of what I was suggesting and almost throw the baby out with the bathwater so to speak.  So what was it that I was driving at when I suggested we need to have a vision for VET?

When I looked around the various websites and documents about the sector from government departments and the like, I could see a lot of talk about what VET was and how it was delivered, but very little that was inspiring, very little that would make me want to become involved in the sector, whether as a student, a provider or an employer.  It was all very boring and perfunctory and well, to be honest just a bit disappointing.  There were also lots of statements about data and regulation and quality, but again it was all written in such boring and uninteresting ways that no one could actually get excited about it.

I wrote late last year about the problems of the VET brand in Australia and that as a sector we needed to do something about it and that actually having an overarching brand for the sector would make a significant difference.  The general public, students, their families, even their employers are not terribly interested in figures and data and papers written about completion rates and how the VET sector helps disadvantaged people to improve their chances of workforce participation.  I mean even I got bored writing that sentence, now imagine how someone feels who is trying to find somewhere to study aged care or plumbing, or any other VET course, or trying to decide whether to go to Uni or and RTO, feels when they read that.  I have got a word for you – uninspired. People want to be inspired to take action, they want to feel that the decision they are making is the right one, they want to feel reassured and unfortunately data and boring statements about what VET is doesn’t do that.

Now to be fair, I know that a lot of  providers both public and private do a tremendous amount of work on their brand and their vision and position themselves wonderfully within the sector.  I know that we spend a lot of time thinking about our position and brand, and what it says about us and what we do. However I can’t help but think that if we had an overarching mission statement, a vision for the sector from which we and other providers could hang our particular brand, our way of living up to that vision then the sector as a whole might be a better place.

The vast majority of providers, be they public or non-public, do a fantastic job of providing outstanding outcomes for students and lets face it, this sector changes peoples lives.  There is absolutely no doubt about that what so ever.  We are however as a sector absolutely terrible at telling people this, in motivating, inspiring and meaningful ways.  We as a sector need to have a single cohesive vision of our purpose and goals.  We need to make this explicit and we need to spread it far and wide.  We need to make the value of vocational education and training part of this countries psyche and ensure that it is valued for the amazing contributions that it makes no matter who delivers it.

So here is the challenge for you all.  What should a mission statement or a vision for VET in Australia contain, what is it about this sector that will inspire and motivate not just those of use within the sector, but everyone else as well?


Is there a problem with VET in Schools?

We all know what VET is schools is, vocational qualifications delivered through the secondary school system, with either the school being a registered training organisation in its own right or where it is tightly partnered with another provider.  Well it appears that there may be some problems?  I say this because it seems that there are a number of investigations, research, internal and external consultations going on at the moment at various levels across the country and it seems from what I have been told by more than a few sources that the results of these investigations for want of a better is well, not great, perhaps even damming.

So what is the problem?  It seems that the numbers of students completing certificate i and ii courses through the various VETiS programs is dropping, replaced by year 11 and 12 students undertaking certificate II and IV and in some cases even higher level qualifications.  Now you might be thinking is that actually a problem, delivering the higher qualifications will give the student advantages over just having a certificate i or ii when they leave school.  Now while that might be the case if these qualifications were being delivered properly, but it seems that at least two investigations have found that that is simply not the case.  They seem to have found that these higher level (certificate III and above) programs being delivered within the school environment are being significantly dumbed down, often having very little connection to the industries they are supposed to be being trained in, insufficient workplace based learning and placement time and a lack of properly qualified trainers.  All of this is leading to students finishing year 12 with a piece of paper they think is going to help them get a job, but is really in terms of their skills and employability little more than a certificate of attendance.

Now if these rumors (and I have to stress here that no one at any of the Departments of Education has verified any of this, at least not officially) are even somewhat true, it points to some significant issues within VETiS.  I was concerned sometime ago what I noticed more and more secondary schools delivering Certificate III and above programs internally as I had always viewed the role of VETiS to be preparatory, providing year 11 and 12 students with pre-vocational, and pre-work level qualifications, those qualifications that usually sit at a certificate i and ii level.  Given the changes to a range of qualifications where work placement and more assessment criteria based on actual work have been included, it has for a while now seemed difficult to me to figure out how a secondary school RTO could be meeting all of the requirements of at least some of the programs they are delivering, at a certificate III level.  The of course seems only to increase substantially as we move up the AQF levels.  I am also entirely uncertain that whether or not the vast majority of secondary school students have the capacity to be able to successfully complete diploma level study in particular while still in school.  This should not be taken to suggest in anyway that there aren’t schools out there that are doing fantastic things for their students in the VETiS space, or that some students may have the capacity to undertake higher level studies while still in school, it is however something we need to look at very very carefully.

It is already extremely difficult for school leavers to find employment, particularly employment in areas that they actually want to work in, not preparing them properly for entry into the workforce is only going to make that situation worse.  We may think that providing a student with an ‘easy’ route to a certificate iii or higher during their time at school, particularly where that student may not be going excel in other more traditional curriculum, will assist them to find work when they leave.  It won’t.  If they are not properly competent, even if they do get a job, they will find themselves out of a job just as quickly and find getting another job in their industry much more difficult.

VETiS should be there to prepare students to move into either further study in their field or to start work and learn while working.  It does that best at least in my opinion, by providing them with those courses which prepare them, which provide them with the basics of work of their particular industry, those traditional certificate I and II level courses, not certificate III and above.

I certainly hope that the information around the VETiS sector that we are seeing is not correct, but sadly for my experience it does seem to be the case.  I think VETiS is fantastic and I would hate to see it damaged by the pursuit of extra funding and an ‘easy’ solution for some students.

Anyway that’s just my opinion

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