Interview on 702 ABC Sydney Breakfast with Jen Fleming
Issues with Labor’s failed VET FEE-HELP; New VET Student Loans program

Jen Fleming: Well we just heard then that among the big news today is that the private college industry is to be given a major shakeup. We know the Government has been looking to curb the ballooning loan fees and to combat dodgy practitioners, so what are the changes that will be made and will they work? With me this morning is the federal Education Minister, Simon Birmingham. Minister good morning.

Simon Birmingham: Good morning Jen, great to be with you.

Jen Fleming: What are you announcing today?

Simon Birmingham: We’re announcing today that we will bring to an end Labor’s failed VET FEE-HELP loan scheme which will be shut down from the end of this year and we will replace it with a new VET student loan program from 1 January next year that is built from the ground up with much tighter restrictions on which providers can offer loans, which courses can be studied, what available – loan values will be available and what level of engagement students are required to undertake to access those loans.

Jen Fleming: How much has it cost us so far?

Simon Birmingham: This program has cost us billions of dollars, we’ve seen because of the poor design of it, remarkable growth, blowing out from around $325 million in 2012 to $2.9 billion in 2015. We’re estimating that our changes we’re now taking by shutting it down and replacing it with a much more targeted program will save around $7 billion over the next four years or $25 billion in bad loans over the next ten years.

Jen Fleming: Now for part of the problem is that vulnerable people were targeted with promises of an iPad, not realising what they were signing up for and in most cases- in many cases, would never be able to complete a course. Will you be seeking to get money back from those people?

Simon Birmingham: Well again a couple of points, firstly we did, way back in April of last year, shut down the ability or the legality of offering inducements for people to sign up so the iPad and laptop giveaways were brought to an end at that stage, but yes there are a range of prosecutions underway by the ACCC, compliance measures underway by my department which are seeking to recoup some money, ensure some debts are waived where people were clearly falsely illegally signed up to these loans.

Jen Fleming: Now you say in the new system that the courses will be limited to those with a high chance of employment, who will determine that?

Simon Birmingham: So we’ll be working off of the different skills list that the states and territories produce and that the intention at present is that courses will need to be on at least two different state or territory skills lists to be eligible for one of these new VET student loans. That will provide a guarantee that the states and territories are recognising these courses as being of need in their local economy and improve the likelihood of employment outcomes for students. We’ll also be expecting that providers will be demonstrating that they have strong links to employers. Only the TAFEs and public providers will be given automatic access into this new program. Others will have to jump through very clear safeguard measures to make sure they are good providers of strong repute, with strong ties to employers and are likely to only be providing high quality courses to genuine students with strong employment outcomes for those students.

Jen Fleming: You mentioned the TAFE system in New South Wales, money’s been pulled out of that sector into the private sector, you’re saying that will get automatic entry. Should you perhaps just be boosting that existing sector?

Simon Birmingham: Well TAFE was one of the beneficiaries of the old VET FEE-HELP scheme, New South Wales TAFE grew in terms of revenue that it realised under the scheme from $91 million in one year to $190 million in another year so significant year-on-year growth that the TAFE sector was realising under the old scheme as well which is a big flow of revenue and cash into them. We recognise that TAFE provides high quality services in many, many instances and that’s why we’re providing them with direct access into this new program, whilst ensuring that there are tight controls so that only genuine good quality private providers with high employment outcomes get in under the new arrangements.

Jen Fleming: Speaking with federal Education Minister Simon Birmingham. Minister, isn’t there always an issue if you’ve got a for-profit business. If you’re wanting to make profit out of education then that might skew what you provide.

Simon Birmingham: Jen, some of the research shows to us that, and research released by the National Centre of Vocational Education and Training that the best employment outcomes, the greatest employer satisfaction and student satisfaction actually occurs in the private fee for service market where people are making a real assessment about the cost and the value of what they’re studying. What we are trying to do is preserve the best bits of that alongside the important role that our TAFE system can play through this loan scheme but importantly we are applying caps in relation to the loans students can access of $5000, $10,000 and $15,000 dependent on the course that’s available, obviously some courses like commerce or business management can be delivered at a much lower cost than other courses such as diplomas in agriculture or engineering.

Jen Fleming: Now how will this be monitored?

Simon Birmingham: Well we’re putting in place very strong safeguards from the ground up, as I say first and foremost there are the barriers to entry for private providers to get in, secondly restrictions in relation to what can be subsidised, the types of courses, the fields of study and these loan caps but on top of that, we will be expecting that there is an annual process for providers to advise us what it is that they are seeking to offer in terms of the fields of study and the number so of places over the next 12 month period, we will be able to cap them and then of course we will be capping them based on their outcomes, the completion rates, the student satisfaction, the employment outcomes for those providers.

Jen Fleming: Well I think there are a lot of people who have been quite dissatisfied with the previous system, something had to happen, thanks for your time this morning Minister.

Simon Birmingham: A pleasure Jen, thank you very much.

Jen Fleming: That’s federal Education Minister Simon Birmingham on those changes that will be announced today in relation to those private education providers.