Does Public VET mean Quality VET?

Before I start I need to make something clear, I think that a well supported public VET provider is, for the most part, a vital part of the VET landscape in this country.  There is work and projects which are done by the public provider which are either not done by non-public providers or only done by a small number of non-public providers, usually from the not for profit sector.  This piece should also not be taken to be criticism or bagging of the public provider sector, but rather a look at what seems to be a view being pushed by a range of particularly media commentators that the Public provision of VET through TAFE automatically means quality.

Firstly then a couple of facts.  The vast majority of private, again I prefer the term non-public providers, deliver high quality outcomes for their students and employers.  We can see this from NCVER data, and a range of reports from the various state and federal governments.  We can also see this from the small number of non-public providers who have closed or been closed as a result of the fall out from the VET FEE Help issues.  As I have always maintained there were about ten or so providers who were not playing the game as it should have been played so to speak.  10 out of around 4000 or about 0.25% of all providers.  Enough defending the value of non-public providers however’ what is a far more interesting phenomenon I think is the calls from various commentators, that governments should be cordoning off more funding for public providers, because, and this seems to be a common theme, public providers provider quality training.

It is important to note here that I do believe that for the most part public providers (TAFE) do provide quality training outcomes to their students and employers, however as with non-public providers I simply do not think that we can automatically assume that public means quality in all cases and in all courses.  We certainly cannot assume that public means better than non-public in all cases and in all courses.  There are numerous examples across widely varying industries of non-public providers delivering training of at least the same, if not better quality than that which is delivered by TAFE.  Just as there are examples in the opposite direction as well.  TAFE does some things very well. Non-public providers do somethings very well, and across the board there are things are probably not done as well as they could be.

Of course the point of this view is to push the agenda that because TAFE equals  quality that TAFE should get the lions share of government funding.  The interesting thing is that it already does.  The vast majority of government funding and training monies go directly to TAFE, in fact in most states the split between public and non-public when it comes to funding is about 80/20.  So somewhere in the vicinity of 20-25% of government funding goes to non-public providers, while 75-80% goes to TAFE.

So if TAFE already gets the vast majority of government funds allocated to training already,  and if across the board it really doesn’t seem to matter where a person goes to get your training done, as they are probably going to get a quality experience, which meets their needs and provides them with the outcome that they desire regardless of the choice them make, where, oh where is this view coming from.  Part of it is certainly ideological and interestingly I have no real problem with groups, particularly political parties, taking their ideological stances, I just want them to be honest about it.  I don’t care whether you are a politician, part of the education unions, an academic or a researcher, or anyone else for that matter, if you are making a stance on ideological grounds then at least be willing to tell us that.

What this sector needs going forward is not infighting between the various parties, interest groups, providers, media and others, who are whether consciously or not, promoting a particular ideology or agenda.  We need facts and informed discussions.  We need everyone to sit down, put their baggage, their ideologies, to one side, and listen to what other people are saying.  Listen, then openly talk and enter into meaningful discussions about what is best for this sector and the vital part that it plays in the future of this country.

Voluntary Administration, closures and VSL – A New Year in VET

As many of you may be aware a number of RTOs have over the last few weeks have shut their doors either voluntarily or not so voluntarily.  A significant proportion of these providers were ones which had large exposures to the VET fee Help market and have been financially impacted quite severely by the move to the new VET student loans scheme.  Have we seen the last of these closures?  I certainly don’t think we have. Over the rest of this financial year we will see the closure or downsizing of a significant number of VFH providers who, for what ever reason have been unable to adapt to the new market place.

Why is this happening?  There are a number of quite obvious reasons why this is occurring, although it is important to note that I have know direct knowledge of the the reasons behind any or all of the recent spate of closures.  The first reason I would point to however,  is a simple one, either the provider has not been granted access to the new VSL system for whatever reason, or the courses which they relied on have been removed from the list.  In both these cases the revenue which was being generated through VFH will have effectively stopped.  Take for example a provider with $11 million turnover, $10 million of which came from VFH.  Not being given access to VSL or having their courses removed from the list effectively reduces them to a $1 million turnover business and destroys the cash flow created through the VFH system.  Finding a way to plug this revenue hole will be almost impossible given the changes under VSL, because even if the provider were to be granted VSL access in the next round or commence delivery of courses which are now on the approved list there are other issues which I will outline below.

The second reason why a number of VFH providers are struggling is the loan cap.  As we know the government has capped loan amounts depending on the course you are undertaking, at $5,000, $10,000 and $15,000.  Let’s take our $11 million provider again.  Say they were delivering the Diploma of Leadership and Management under VFH for $15,000 and this accounted for all of their $10 million VFH income (I know this is unlikely but it is just an example).  The price of the the Diploma is now capped by the government at $5000, so even if the provider is granted early access to VSL and can still generate the same number of enrollments, without the use of third party brokers (which now can’t be used under the legislation) their income from ‘Loans’ under VSL will be at most 1/3 of what it was under VFH, reducing their income to $3 million making it exceedingly difficult to continue operating the same manner they had been.  The other thing to consider here is that even if the provider can generate the same number of enrollments, payments under VSL are now made on a completion rather than commencement basis.  This means that providers now have to have enough additional cash flow generated from other sources to sustain delivery and assessment to these students for perhaps as long as six months before they complete and payments flow through.  Even if therefore a provider was granted access to VSL and could generate the same level of enrollments, they will not, in most circumstances be able to maintain their cash flow at the same level which will of course mean they will either need to severely downsize or close.

The changes from VFH to VSL give us substantial evidence as to why providers should ensure that their revenue streams are as diversified as possible if they want to be able to sustain changes in government policy, funding and the market in general.  Heavy reliance on one source of funding, as myself and others have said for a long time now, is a recipe for disaster.  So will we see more of these closures?  I certainly expect that we will, in particular I think we will as the end of this financial approaches and the legacy arrangements around VFH (and the payments associated with those arrangements) cease and revenue streams become tighter.  I suspect that June/July will be the prime time this year for the closure of a number of RTOs

Anyway that’s just my opinion.

Happy New Year.

 

Oh What a Year its been!

When I think back over the last year, it really has been quite a big one for the sector.  So as the holiday season approaches and as I probably will not be updating my blog as regularly again until January, I thought I might consider the year past and the year ahead.

As just about everyone knows, in fact I think it would be difficult to find anyone in this country who didn’t have an opinion on VET at the moment it has been in the news so much, the sector has been in turmoil for a pretty lenghty period of time.  I remember Rod Camm talking at the Queensland ACPET Christmas party last year and saying he both thought and hoped that the worst was behind us.  However with ACN going into administration, Aspire college and the rest of the Global Intellectual holdings disappearing overnight, Careers Australia and the ACCC decisions and agreements, and Ashley Services looking very shaky at the moment it has not been a great year, particularly at the top end of town.  Not that small to medium sized providers were immune either with quite a few either leaving the sector voluntarily or because they could simply not sustain their businesses anymore.  Add to this massive uncertainty about the future of the sector during a very very long general election race, what would happen to VET FEE Help and the debacle of the new Certificate IV in Training and Assessment qualification and this year has been a cracker.

Enough bad news for the time being though.  What have been the positives for the year? Well, whether we like it or not there is now a replacement to the troubled VFH system, VET Student Loans, so at least there now exists a level of certainty around the that portion of the market. A large proportion of those providers who were doing the wrong thing have now either left, been forced out, or either been fined or in the process of being chased by the ACCC and others.  Simply removing these providers from the pool can only help to improve the quality and perception of the sector.  In terms of large scale good news that is about it, however I have seen so many providers this year, working so hard to create outstanding outcomes for their students and clients and when we look at the research and figures from NCVER we can see that overwhelmingly, this sector does a fantastic job and contributes so much towards the Australian economy and workforce.

So what about next year? Let’s just say that I think the roll out of VSL will be an interesting (the Chinese curse kind of interesting) space to watch.  With stricter entry requirements, loan limits for students, variable caps for providers depending on completion rates and a raft of other things, a lot of providers who were VFH providers or who might have been considering moving in that direction are viewing it as simply falling in the too hard basket and won’t be seeking approval to deliver.  The National Partnership agreement on skills reform, up for renegotiation as the current on expires in June 2017 seems currently if not dead in the water, leaking severely, with the states calling for a one year extension to the current agreement and the Federal government pretty much saying no.  No NPA would basically leave most of the state budgets for training with holes of around $100 Million  plus.

In terms of providers and the market itself, I also dont think we are out of the woods yet in terms of closures, restructures and downsizings.  It seems to me, as an outsider, that Ashley Services may have a very hard time trading out of the position it is currently in, at least in its current form.  There are also a number of other providers who had grown substantially on VFH incomes who will see those incomes slashed by in some cases 50-75% even if they are given approval to deliver under the new VSL system.  This will mean in most cases that there will be little chance of them continuing in their current forms and closures or restructures in terms of both staff and delivery will need to occur.  Is this a bad thing?  Yes and No.  Clearly there are probably some providers who expanded rapidly, did not deliver and did not properly invest in their continuing existence and the market may well be better off without them.  The down side of course is much wider than that, fewer available places and less choice for students, quality VET staff finding themselves unemployed or moved to contract and part time, casual work. There may also in some areas be knock on effects in terms of skilled workers in certain areas over the coming years.  So while there is a need to make sure that providers are meeting their requirements and delivery quality outcomes to their students and stakeholders, there is also a need to ensure that happens while we keep an eye on the wider picture and the impacts the VET has more generally.

Next year will be a year for consolidation and restructuring throughout the sector at all levels, a year of readjustment and reevaluation.  A year where we will see the number of providers, particularly at the bigger end of town shrink considerably both in number and size, but also hopefully a year in which the sector can reestablish itself and begin to move forward.

Anyway that’s just my opinion.

Thank you all for reading and interacting with this little slice of me for the year and thank you to all the friends both near and far I have made or held onto over the past year.  May you all enjoy whatever it is that you do over this time of year and all return happy and safe in the new year.

Paul

The State of the VET industry survey results.

As many of you are aware last month I conducted the second State of the VET industry survey through this blog.  Thank you to the many 100’s of people who responded to this survey.  Without your input it would be difficult to be able to look at the data in a meaningful way.  What I want to do in my post today is to look at some of the results and think about what they might mean and how they look when compared to the results we got from the survey which was undertaken six months ago, because as we know a lot has changed in the sector since then.

As with the last time the vast majority of respondents were either from Non-public RTO’s or were independent trainers and assessors, with a very small amount of respondents from TAFE, who were consultants, or who worked for non-RTO training companies.  Also in tune with the last survey the majority of respondents were either in senior management roles in their organisation or where in training and assessing roles.  Interesting, though not significantly was a reduction in the number of compliance or middle manager respondents from the last survey.  Again similarly respondents worked for organisations which primarily worked either nationally, in Queensland or in Victoria.  This similarity in demographic data around respondents is important because it provides us with a level of confidence when we look at the other data collected and see changes from previous surveys, that the data sets are at least on the surface comparable.  So lets look at the other data and see what we can see.

When asked ‘how satisfied are you with the vet sector currently‘, the answers were fairly similar to previous surveys, which given the results of those surveys is not terribly encouraging.  On the bright side the percentage of people who were very dissatisfied dropped from 29% to 23%, however on the not so bright side the percentage of people who were dissatisfied, rose from 51% to 55%. Interestingly about 5% of respondents were satisfied with the sector currently a small rise on last survey’s 0%, yes zero.

Clearly casualisation of the training workforce and the use of contractors is something that is on the minds of everyone, as while  the number of full time, part time, casual employees and contractor remained basically the same as with the last survey, when asked how they thought their workforce would look in 12 months, the consensus was that full time numbers would drop by around 25% and while part time numbers would remain about the same, the 25% loss of full time staff would would be taken up by casual and contracted staff.  This thinking is clearly driven by uncertainty in the market around sustainability, cost vs income, and an uncertainty around funding arrangements.

This uncertainty plays out across the questions regarding income streams, profitability and continued financial viability.  While it seems that most RTO’s are attempting to utilise as many different sources of income as they can, there is a significant, almost 15%, increase in the number of RTO’s operating in the fee for service space, with that 15% showing up as a drop in the number of providers utilising VFH arrangements.  Providers have either dropped out of the VFH market or have changed their business models to prioritise VFH less within their income streams to attempt I think to somewhat limit the damage to income as a result of the changes to VFH and the release of VET Student Loans.

Interstingly more than double amount of respondents this time felt that their profitability would increase over the next 12 months, 38% as opposed to 14% in the last survey, problematically however,  there was also a significant increase in the number of respondents who felt their profitability would decease substantially, 24% in this survey as opposed to 11% in the previous survey. My initial thoughts around this would be the increase in the number of who felt their profitability would decrease substantially stems from the changes to be rolled out under VSL, such as price and student enrollment capping, while those that feel their business will increase, are I think those who feel that increased fee for service delivery and changes to business models will drive profitability up.

This trend is around uncertainty is also seen when we look at financial sustainability over the next 12 months.  While the percentage of respondents who answered neutral, sound or very sound in terms of their financial viability over the next 12 months remained exactly the same at 37%, the number of responded who felt their financial viability was very unsound increased from 9% to 23%. The upshot of this would seem to be that we will continue to see a range of providers throughout the market close up shop over the next 12 months unless they can find ways to solidify their financial base.

The final thing I want to talk about today was the results of the questions around the VET Student Loans (VSL) proposal which seem to echo the sentiment that I have been hearing a lot from people that I talk to.  A significant number of respondents (41%) are neither happy nor unhappy with the proposal, answering neutral to the question how happy are you with the VSL proposals.  While it is true that about 30% percent of respondents were dissatisfied or very dissatisfied with the proposals about the same percentage were satisfied or very satisfied with it.  Clearly however the vast number of respondents, some 73% have no intention at least in the short term of applying to be able to access the VSL system as it currently stands.

So there you have my first cut of the data that has come through and as I said a lot of what the data says seems to echo the general anecdotal sentiment that I have been hearing over the last few months.  While people in the sector are worried about its future and the impacts of the massive amounts of change we have seen, and will continue to see, there is still significant numbers of people who feel at least somewhat buoyant about the future

I will leave a link to the survey here  so if anyone who hasn’t contributed would like to they can.

Now I don’t know about all of you, but as the silly season is fast approaching, (I will start saying Happy Christmas to people tomorrow as I have a ban on saying it prior to December 1st) things will slow down somewhat around here until early in the New Year.  So firstly I would like to thank all of you out there who read this little piece of me, whether you read every everything or have just read one thing I truly appreciate it.  To all the people who comment, both here on wordpress, on linkedin and in other forums, I really want to thank you for engaging, for challenging, for both agreeing and disagreeing.  If as a sector we are unable to look upon the work that we do objectively, and to listen to both the criticism and the praise then we are doomed to fail.

 

 

Student cohorts, learning outcomes and employment possibilities

So as you may have noticed I haven’t posted anything for a couple of weeks, this was mainly due to two things, firstly I was on holidays and secondly I have actually been out on the boards so to speak again, delivering some training.  A certificate II in community services to be exact which has kept me in the field and somewhat away from the keyboard.  It has done something else as well, it has driven home to me the need that we have in this sector to make sure that when we enroll people in programs that they are in the right program for them.  The level of the program needs to be right, both in terms of content and assessment, it has to link to what they want to do with their lives and there needs I think to be the possibility of an appropriate outcome for them.  Unfortunately I think that perhaps we in the sector and those around the sector who recruit, for want of a better word (I will explain what I mean later), student cohorts for us to deliver training to sometimes don’t look hard enough at those who are going to be doing the course before we start them on their journey.

Now as most of you know I am a strong believer in the value of education for everyone, particularly in terms of the possibility of improving a persons lot in life shall we say, for example assisting them to move into gainful employment.  At the same time I am troubled that a lot of the programs and funding which is spread around by various governments with the idea of helping highly disadvantaged people to improve their prospects  may in fact by quite ineffectual simply because the student cohorts who are being recruited into these programs, for a range of reasons, such as, the  eligibility requirements, the pressure on organisations to reach certain numbers of attendees and recruitment being often done by third party organisations (community sector and NFP’s) who don’t understand the VET system.

I have had this exact thing driven home to me over the past weeks, while as I said delivering a Certificate II in community services through a program where community sector organisations are funding to recruit and provide a range of wrap around services like CV’s for example and the provider ‘simply’ delivers the accredited part of the program under standard funding arrangements. That I encountered such issues with a lower level qualification may puzzle some of you, but bear with me as I explain.  Firstly there are a range of criteria set by the government for who can undertake these programs, students must be either unemployed and not receiving commonwealth benefits or have been unemployed for a period of more than six months.  Now as anyone who has been unemployed for more than six months, either by choice or not, their are in general significantly more issues around getting back into the workforce then for people who are currently employed or only short term unemployed.  Secondly the organisations are given funding for a certain number of students, so if they don’t get the numbers they need they may well have to refund money to the government when the program is over and thirdly the vast majority of organisation involved in these programs have little no experience in the provision of accredited training, they are service providers not training organisations.

So what happens when all of this comes together?  Well you get a group of people (twelve to be exact) out of whom, I would suggest only two will gain employment as a result of the program and maybe another two more will go on to do further study.  So about two thirds of the group will not achieve one of the listed outcomes for the program. Why? Well there are a variety of reasons some of which are,

  • lack of social and work skills, to such an extent that it will take far more work and training than what they are having to overcome
  • Attitudinal issues bought about from previous experiences, both in work and elsewhere
  • a lack of ability to determine what is appropriate behaviour and act accordingly, and
  • their world view

The first thing that is interesting about this list is that for the most part none of these issues relate to their ability to successfully complete the assessments for the program.  There are one or two who have really struggled with the content and assessments, but all but one will actually successfully complete.  What is interesting is that when the class first started I thought the number of people who would get an appropriate outcome would be much higher, but as time has progressed and we have had more and more conversations, the students have felt safer and more comfortable, they have said and done things which show clearly why a number of them have had the experience of never keeping a job for more than about 3 months.

None of this of course should not be taken to suggest that the students have not grown, learnt things and perhaps become a little better equipped for life.  What it is to suggest is that we need where we can, across the board, to try and do a bit better job when it comes to recruiting students, across all levels of qualifications.  Now can we always get it right at the start, no and to think we could would be foolish.  We recently had to withdraw a student who had an undisclosed mental illness, which made it impossible for him to complete the requirements of the course.  He didn’t disclose it, because he thought it was going to have an impact, but as the course rolled on it did and despite the supports we were able to offer it was impossible for him to continue and as I have said with my recent experience, issues didn’t become clear until we touched on a particular subject or the student felt sufficiently safe.

The other thing that needs to be done is for the funding bodies to look at the criteria they are placing on these courses and programs and ask themselves some hard questions about whether the criteria themselves are making it more difficult for everyone, students included to get the desired outcomes.

Anyway that’s just my opinion.

Doom and Gloom or an opportunity to Bloom – VET student loans scheme

So they say a week is a long time in politics and this last week has been a cracker for so many reasons.  The only one I am going to talk about today though is the Vet Student loan scheme which Minister Birmingham announced last week.  Today we saw the release of the eligible courses list for the new program with around 350 programs making the initial list, though there is room for submissions for the inclusion of other programs to be made and these close on 23 October.  Enough about that for the time being, I will come back to the list a little bit later.

There has been a lot of criticism, some of which I think has justification, some of which I don’t think does.  What there has been is a lot of doom and gloom and a lot of talk about the government ruining people’s businesses.  We even saw AIPE go into voluntary liquidation on Friday.  What cam to my mind when I was listening to all of the discussions, most of which will continue I think for at least some time yet, was how it all linked to some of the things I have often talked about in terms of business models and the business of vocational education.  I have heard an number of people talk about the fact that their businesses will be destroyed as a result of these changes or at the very least they will have to downsize their businesses substantially.  Before I go on it is really important to say that I feel for these people.  These people have for the most part done the right thing, obeyed the rules and built businesses which provided high quality educational outcomes to their students and the industries they were involved with and at least in some cases the investments they have made in these businesses over the years will be seriously devalued.   What this drives home to me is the important of distributed revenue streams in your business.  Providers who rely to heavily on one source of revenue, particularly when that revenue stream is controlled by the government in some way are always going to be faced with these challenges.  The same can be said of providers who rely entirely on fee for service markets, when the market wobbles, particularly if they are involved in niche areas, so do they.  All of those who are in the business of vocational education, even public providers need to have diversified models of revenue generation in order for them to weather changes to funding models and changes to the market in general.  It may be okay to make hay while the sun shines, but you always need to remember that some days its rains.

There has also been criticism of the tiered or banded system for student loans, with the levels being $5000, $10,000 and $15,000 depending on the type of qualification, although when we look at the draft list which has been released we see that everything but business and commerce it appears will be in the $10,000 band or above.  The criticisms leveled have again be around how providers can deliver the course for the value of the loan the government has put on it.  Now to be fair the government has said that the loan cap is just that a cap on the amount of money they will loan a student to pay for a course.  They have said that providers can charge whatever they want to, but then the student will have to meet the difference between the two figures.  It is also fair to say that there is an argument about access and equity which can more than reasonably be made about having significant differences between the cap and providers fee, the ability of potential students to meet that gap and questions of equity which arise around that.  This is however an argument for another place, suffice it to say here that large difference between the loan cap and the provider fee will make it difficult for those in the most vulnerable and lower socio-economic groups to be able to afford to enter training through this scheme without additional assistance, where providers choose to charge fees higher than the loan cap.  There are of course also counter arguments about appropriateness of qualifications, state entitlement funding and employment outcomes.  Again however a range of these criticisms are tied to the kinds of business models which were encouraged under the old VET FEE Help system.  I know of a number of providers who despite having extensive Certificate I-IV scopes only ever advertised the high revenue VFH courses on their websites and through other media.  They also did not seek to build their entitlement funding or fee for service businesses because there were substantial sums of money being generated through their VFH business operations.  The funding drove the business models, a little bit like the tail wagging the dog so to speak.  One of the reasons why some providers will find it difficult to deliver under this new scheme is that their model of delivery, and student acquisition is one that relied on the continuation of VFH fees at particular levels.

I have often suggested that most, (and it is really important that this is taken for what it is, a generalisation which also acknowledges that there are outlier courses which cost substantially more to deliver), that most diploma level courses can be delivered in such a way as to produce high quality student outcomes and competency for $10,000 or less.  Why do I say this; because less than 5 years ago they were and there was very little if anything wrong with the graduates being produced.  Over 5 years we saw prices of some Diploma level qualifications rise by 300-400% and business models develop which required these increases to be cost-effective.  It is vitally important to note that most of these business model were not flawed or did not seek to rort the system or rip of the government or students.  Their only issue was that they relied so heavily on both VFH and particular levels of funding.  The ability to set fees where ever providers wanted allowed and even promoted providers adopting business models that only worked under a certain set of circumstances.  Are there models which will work under the new scheme?  Certainly there are and I think the suggestion that it will drive all providers to deliver one to many elearning with little or no support are false.  There are solid face to face models which not only can clearly operate under this new model but can also be profitable.

let’s go back to the list then shall we.  As I said earlier the vast majority of programs are at the $10,000 or $15,000 dollar level with it appears only management and commerce at the lower $5,000 level. A lot has been made about the government ‘picking winners’ so to speak and the inequity between someone who wants to study a vocational education course over a Higher Ed course and while there is weight to this argument there is also weight I think to the argument that where the money is being provided by the government, even if that is through an income contingent loan of some description, there needs be a return on that investment in terms of workforce outcomes.  Is, by creating a list, the government saying one course is better than another, no I don’t think this is the case.  I think the government is legitimately saying, one course seems to have better workforce participation outcomes than another and because of that we are going to provide funding for students who want to undertake this course.  The interesting question that arises from this of course is whether it is fair to apply a test like this to VET and not to HE, but again that is a debate for another time.

So why did I call this post Doom and Gloom or an opportunity to Bloom, mainly because I think as with all change this one presents us as providers with a choice.  We can either spend the next few months worrying, complaining and trying to get the government to change it mind, which it may do on small things, but I doubt it will on anything major, or we can look on this as an opportunity to re-energise what we do, consider our business models, look at ways of not just working, but thriving in this new environment.  I will let you guess what I intend to do.

Anyway as always that’s just my opinion.

Massive changes to VET FEE Help – The King is dead, long live the king

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.

The Fallout

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.

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