Massive changes to VET FEE Help – The King is dead, long live the king
October 5, 2016 1 Comment
While right at this point there has not been a complete outline of what is going to happen it is fair to say that the days of VET FEE Help are over. The deeply flawed system which most of us have been critical of almost since its inception will be scrapped at the end of the year and replaced with a completely new system for 2017. If you want to look at what is currently being reported about the changes you can see articles here and here.
What do we know at the moment? Well it seems from looking through the information that I have a lot of the suggestions that myself and other have made and that I have talked about at length in previous articles (Redesigning VET and reinventing VFH) have made the cut shall we say. Lets then look at the major changes we know about.
Everyone will have to reapply and there will be tighter conditions for entry
This had to be part of any package of reforms as far as I was concerned. No package where currently contracted providers were simply rolled over into a new system was ever going to have legs. The old application system and criteria were systemically flawed and concentrated on the wrong metrics entirely when both determining if someone could be a provider and then managing that provider. Making everyone reapply will almost instantly contract the number of providers because a number of current providers will simply self select out for various reasons and I am certain that the government will not accept contracts with a number of providers who may look at applying. The idea that Relationships with industry, student completion rates, employment outcomes and a track record in education will all be assessed when deciding which colleges can access the loans program is a breath of fresh air and should have been included in the first place.
A ban on the usage of brokers and cold calling by providers
This is something that had to happen as well, not just because of what brokers have done to the system, but because cold calling random people and hard selling them a $20,000 diploma has nothing to do with educational outcomes and everything to do with making as much money as possible in the shortest period of time. It has been my opinion for a long time now that the rise of brokerages, and providers willing to use their services, no questions asked shall we say, was the single most significant factor in the issues which arose from VFH.
A three-tiered system of loan limits will be introduced, with loans capped at $5000, $10,000 and $15,000 depending on the cost of teaching the course.
Again this is in my opinion a no-brainer. I am yet to be convinced and a lot of people have tried, that a diploma of management is worth $10,000 plus. I think a tiered system rather than a flat cap acknowledges that different types of courses require different investments and have different costs associated with their delivery. What this will do is reign in the costs associated with programs and bring them back to some sort of normalcy, something they haven’t had in a number of years. Remember in some cases we saw 300-400% rises in course fees over essentially a 5 year period, with, in the vast majority of cases, no changes to costs or content, well except for having to pay a broker 25%. UPDATE – Loan caps only apply to the amount of money which a student will be provided with by the government to ‘pay’ for their course. Providers may charge whatever they wish for the course in question and students will be required to pay any difference between loan cap amount and course cost themselves.
Only students enrolled in courses aligned with industry needs and likely to lead to a job will be eligible for the loans.
I have said it before and I will say it again I am sure, vocational education is about employment outcomes and workforce participation and my mind has boggled at some of the courses which I have seen offered by certain providers. I acknowledge that there are concerns around priority lists and the like, but if we are being honest here just how many personal trainers and counselors do we need to have. This in conjunction with the tiered payments model should at least, if properly applied mean a much stronger employment outcomes for money invested in income contingent loans.
The new scheme will include tighter conditions so colleges can be paid in arrears and poor performing institutions can be suspended and have their payments cancelled.
All providers will be paid monthly in arrears based on authorised and verified student data. This is something which should have been part of the system from the word go. Large upfront commencement payments drove the other activities which broke the system. If there had not been such substantial almost unregulated upfront revenue a lot of the issues which occurred simply would not have happened.
Massive contraction at the Mega end of the market. Those providers with large exposure in their revenue streams to VFH, particularly those carrying a high level of debt which requires servicing are going to be in serious trouble as will any provider who has been used to charging $10,000 plus for a Diploma of Business, whether they are small or large. Any provider which doesn’t have a diversified business revenue model will struggle to find their feet again and we will I think see a not insubstantial number fold or contract heavily. If I was a provider who relied on VFH for a substantial part of my revenue, particularly if my dealings with ASQA or the Department had been anything less than favorable, I think I might be a little worried right now.
But anyway that’s just my opinion.