New VET Student Loans unlikely to weed out dodgy private providers

Education Minister Simon Birmingham argues that the new VET Student Loans program – which will replace the flawed and highly controversial VET FEE-HELP scheme – will “restore credibility” and rebuild trust in vocational education and training.

He claims that the new loans program will help weed out dodgy private providers. These providers, however, have proved very adept at finding creative ways around regulation.

Without additional reforms to improve teaching and learning, it will be difficult to guarantee the quality vocational education needed to restore the confidence of students, employers and the wider community.

VET Student Loans

If the government’s legislation is passed, the new VET Student Loans program will operate from 1 January 2017.

Designed to stamp out practices that flourished under VET FEE-HELP, the proposed new loan scheme will be harder to access.

It sets a higher entry barrier for providers based on their industry links, student completion rates, employment outcomes, and track record as educational institutions.

Student loans are capped with three bands – A$5,000, $10,000 and $15,000 – which are designed to reflect differences in course costs.

Eligibility is restricted to courses that lead to employment. Students will be required to engage with the VET Student Loans portal to ensure their enrolment is legitimate.

Participating providers will be prohibited from using brokers and direct soliciting to recruit prospective students. There are also restrictions on the subcontracting of training delivery.

Why was VET FEE-HELP flawed?

VET FEE-HELP was introduced in 2007 to address an equity issue. Students in higher education courses have accessed income contingent loans for over 25 years, but the same opportunity to defer payment of tuition fees was not available to vocational students.

Initially VET FEE-HELP was restricted to courses that provided students with credit into higher education courses – a requirement removed from 2012.

The introduction of VET FEE-HELP was one part of a broader reform process that included the establishment of a narrow form of competency-based training and, more recently, public funding of for-profit vocational education providers.

In this context the VET FEE HELP scheme presented the most extraordinary opportunity for unscrupulous operators.

Eligible Registered Training Organisations could sign up any number of students, and shortly after receive full course payment funded by the students’ VET FEE HELP loans.

Until 2015, this payment was not contingent on student progress. If students failed to start their course the provider was saved the cost and trouble of delivering an educational program and conducting assessments.

Evidence emerged of exploitative organisations signing up students who had little or no prospect of completing their qualification. Some students were not aware of the extent and nature of their financial commitment.

A minority of registered training organisations relied on VET FEE-HELP as a major source of revenue, but there was rapid growth in the number and value of loans they facilitated.

The cost of the scheme increased dramatically from $325 million in 2012 to $1.8 billion in 2014 and $2.9 billion in 2015.

Quality vocational education

Although there is broad support for taking action, public debate reveals uncertainty about the likely impact of this new loans initiative.

Reported concerns include:

• The effect of the loan caps on access to courses, such as nursing, which cost more than $15,000 to deliver. The fear is that additional fees could be prohibitive, especially for people from disadvantaged backgrounds.

• The potential impact on women given that two thirds of VET FEE-HELP borrowers are women, and courses attracting a higher proportion of women were identified as falling outside the program (for example, beauty therapy).

• Whether legitimate providers will be harmed through the introduction of more stringent requirements aimed at the dodgy providers.

Will it be effectively regulated?

A key question is: How will the new scheme be regulated?

Against what standards will providers be measured? And who will be responsible for ensuring these standards have been met? The main regulatory body, Australian Skills Quality Authority (ASQA), does not have the resources or the powers to address existing problems.

More work is required to define and measure a provider’s track record as an educational institution.

The proposed shift in the structure of payment also raises questions about the quality of vocational education courses and trust in qualifications.

Introducing “payment in arrears” – payment following completion of all or a component of the course – is understandable given the abuse of VET FEE-HELP.

However, without being held accountable for the quality of teaching and learning, there is a risk that some providers will take what is referred to as a “tick and flick” approach, pushing students through within minimal engagement in the shortest time possible.

The student will be issued a qualification, but if the course did not develop their knowledge, skills and attributes it will have limited value. This outcome is the opposite of the thrust of the proposed reform.

Placing greater control over student fees will not, in itself, lift the quality of student outcomes and ensure the integrity of the qualifications issued.

One clear way of distinguishing legitimate vocational education providers from the shysters and rent seekers is by looking at their commitment to teaching and learning.

There are no national level mechanisms to directly measure the quality of teaching and learning within the vocational education sector.

This means it is not possible to make registered training organisations accountable for their quality of programs.

To restore trust and confidence in the sector, the focus needs to be centred on developing and supporting teacher expertise. This involves improving the quality of teaching to achieve a greater impact on student learning.

If we cannot offer high quality of vocational education we betray our students, their future employers and the wider community. We waste money and destroy aspirations.

Mary Leahy receives research funding from governments and non-government organisations.

Shelley Gillis has received research funding from a range of government organisations to investigate quality issues in vocational education and training.