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November 20, 2017

Number of students taking on vocational education loans plummets in Australia


Remember last year when the Federal Government announced a crackdown on dodgy private colleges? Well the stats are out and they show a HUGE drop off in the number of students taking on loans to study at TAFE or private colleges.

In the first six months of 2017, just under 24,500 students took on a student loan under the Government’s revamped loan system. By comparison, in 2016 under the old scheme, there were just under 194,000 loans taken out.

The new loans scheme came after a huge crackdown on the vocational education and training (VET) sector. The sector had been plagued with stories of dodgy service providers offering students incentives to sign up via brokers, or even signing people up to courses without their knowledge.

The Government stepped in to try and stop unscrupulous behaviour by announcing a shake up of the system.

Only courses where there areas of skills shortages would be eligible for loans, and loans would be capped at a different tiers, depending on the requirements of your course.

TAFEs and private colleges also had to prove completion rates and industry standing, or be cut out of the student loans system.
Loan figures way, way down. The result of the crackdown is a massive drop off in students taking out these loans.

In the first six months of this year, vocational education students took out loans worth $78 million. In 2016, it was $1.47 billion, and the year before that, $2.92 billion.

The Assistant Minister for Vocational Education and Skills, Karen Andrews, told Hack that reducing the cost of the system and ensuring that money wasn’t misused by dodgy providers was the whole point of the crackdown. There was an expectation that the figures would be lower.

“I think that’s actually a positive for students because one of the things we know is that students have a bit of a lack of confidence in the vocational education system. So the changes that we’ve made have clearly been positive,” she said.

The stats from 2016, when the old loans system was still in place but Government restrictions on the sector were starting up, show that it was the most vulnerable students who were impacted by the crackdown.

The number of Aboriginal and Torres Strait Islander students seeking VET student loans dropped by nearly a third, and students seeking loans from low socio-economic backgrounds dropped by 14 percent.

There was a 12 percent decrease in the number of students with disability seeking a loan, and an eight percent drop in students outside the major cities seeking a loan.

But Karen Andrews reckons that could be a good thing, because it was these vulnerable students who were most likely to be targeted by dodgy operators who left them in debt and without adequate qualifications.

“Those people not being in the system would go part way towards the decline we’re seeing,” she said.

In other words, the VET sector was correcting itself after a blowout, said Craig Robertson from TAFE Directors Australia. There was a large drive by some providers to access these students for the purpose of loading onto those students quite an incredible debt, that there was a bubble.”

“What we’re effectively seeing now is that bubble being removed and we’re probably back to regular rates of participation of those cohorts,” Craig said.

Craig told Hack the “reputational damage” suffered by the VET sector may have led to students reconsidering whether they want to go to TAFE or private college. “Students may have had second-thoughts about undertaking training, and that may well give rise to the general decline in participation rates,” he said.

Rod Camm from the Australian Council of Private Education and Training acknowledges that dodgy providers have hurt the industry, but he’s praised the Government for taking action.

“The key for us is to learn from the past and stop the rorting. It’s been corrected, and rightfully so,” he told Hack.

The Australian Education Union welcomes an end to the rorting, too. But the union’s Federal TAFE Secretary, Pat Forward, is worried that the vulnerable students who aren’t going into the VET sector as a result of the crackdown won’t be given other opportunities to further their studies.

“‘There isn’t a level playing field. The big risk is that now there’s nowhere for these students to go. Unlike university FEE-HELP loans, VET student loans aren’t government subsidised.” she told Hack.

Governments often cover part of the cost of a uni degree, but not so with a VET course. And then on top of that, VET courses attract a large loan fee.

Craig said that fee can be up to 25 per cent of the cost of the course, which would be added to the life of the loan. For example, it can cost nearly $100,000 to study aviation at a private college, and that’s not including a 20 per cent loan fee. There isn’t a level playing field in tertiary education because universities do not attract a loan fee, he said.

Pat wants governments to consider leveling the playing field by subsidizing VET courses so that vulnerable students can take up tertiary education.

Often they are paying more for a VET qualifications in total than students who are doing a degree at university. Karen Andrews said the new VET student loan system should be given a chance to prove itself. We need to give that time to demonstrate whether or not any changes need to be made, she said.

But she said she’d be keeping a close eye on enrollments to make sure the drop off in the number of vulnerable students taking on courses doesn’t continue.

Note : Above post is based on the write-up of Shalailah Medhora, contributed to abc.net.au

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