A Labor-chaired senate inquiry committee has called for an overhaul of the vocational education and training fee help (VET FEE-HELP) system, claiming existing safeguards aren’t working.

In a report to Federal Parliament this month (October 2015), the Education and Employment References Committee said there was evidence of “rampant abuse, accelerating costs, and doubling of bad debt”.

The committee said more effective ways were needed to control costs of courses for students under VET FEE-HELP, by either instituting a lower and separate loan limit or a cap on student loan amounts.

It wants the government to conduct a further review of the scheme, “so that only providers with the highest reputation for quality have unfettered access to the scheme”. The government should mandate minimum entry standards of year 12 completion or equivalent for access to VET FEE-HELP loans for diploma level courses and above, it said.

The inquiry’s two Coalition Senators defended the government’s record and opposed the call for a further review, saying in a minority report “a number of reviews, including this one, have already been held or are pending”.

“While there is more work to be done, the prompt response of the government so far to the issues raised during this inquiry is addressing the behaviour of unscrupulous VET FEE-HELP providers, protecting vulnerable students from bearing the cost of a lifetime of debt and aims to restore the integrity of Australia’s VET sector,” the minority report said.

The full committee report noted calls by some stakeholders to lower the repayment threshold to $30,000 or $40,000. However it said asking lower income earners to pay for the failure of government to properly regulate the operations of VET FEE-HELP – and for the rampant and unethical misbehaviour of some private providers – fails both the practical and ethical test.

“The committee recommends that urgent and concerted efforts are made to further raise awareness of the rights of students and existing standards relating to providers in the VET sector. This effort should focus on advocacy groups dealing with the most vulnerable members of the community, including the long-term unemployed or disadvantaged, migrants and people with disabilities.”

Under its recommendations, the Department of Education and Training (DDET) and the Australian Skills Quality Authority (ASQA) would be asked to conduct a “concerted and urgent blitz” of all providers to ensure that they are consistently complying with the national standards, especially those relating to student recruitment.

The blitz would be aimed at defending the interests of students, enforcing adherence to Australian Qualifications Framework (AQF) volume of learning standards and removing non-compliant registered training organisations (RTOs) as VET FEE-HELP providers.

The Director of Public Prosecutions (DPP) would be encouraged to launch prosecutions against providers engaged or benefiting from fraud and take steps to recover monies lost. In addition, ASQA would be given powers to directly regulate brokers or marketing agents in the VET sector, and to protect students.

The committee recommended the government “caps or otherwise regulates” the level of brokerage fees paid for VET FEE-HELP students to maximum amount of 15 per cent the amount of the loan.

The government was further urged to apply, in consultation with industry and quality providers, minimum hours standards to VET FEE-HELP eligible courses.

“ASQA should be given powers to take swift and strong action against RTOs found to be providing inadequate training to their students. Closer scrutiny would be applied to the early childhood and aged care training sectors, given the concerns noted in this report. The committee further recommends ASQA improve its processes to enable it to more swiftly share information with other levels of government, regulators, government departments and law enforcement agencies.”

Under the committee’s recommendations, DEET would have to approve any instances of RTOS subcontracting out components of their VET FEE-HELP eligible training to non-registered third parties.

An Ombudsman focused on domestic students in the VET sector should be created, and the position industry-funded.

The committee said there was evidence of a “massive transfer of public wealth” from the Commonwealth and state government – and taxpayers – to private individuals “as a result of rushed rollout of demand driven entitlement schemes, particularly in Victoria and by the Commonwealth through VET FEE-HELP”.

There was a clear contrast between the actions of the Commonwealth government and that of the Victorian government, it said.

“In Victoria, the new government has acted to clean up a VET sector in crisis in that state, with the withdrawal of 8,000 qualifications and the naming and shaming of providers.”

The report will go to government for consideration.

Other reviews into VET already held or pending include:
• The Government-appointed a VET Reform Working Group, made up of representatives of students, consumer advocates, employers and providers.
• A performance audit of VET FEE-HELP be included in the Australian National Audit Office’s (ANAO) 2015-2016 work program.
• A VET Training and Assessment Working Group to consider options to strengthen the quality of training and assessment outcomes so as to maintain student and employer confidence in VET qualifications.

The Federal Government has announced it will review VET FEE-HELP in 2016-17.
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