LINDA SIMON. When will students get their money back?

Oct 9, 2018

How many students have been the victims of the VET FEE-HELP rorts?  The Government doesn’t know the answer to this question, nor how much it may cost to waive such debts.  New legislation being introduced to Federal Parliament seeks to make it easier for students who have suffered due to the inappropriate conduct of their VET provider, to have these debts waived. But when will they get their money back?

In late September this year, the Federal Government introduced to Parliament the VET FEE-HELP Student Protection Bill 2018.  According to the Minister Kelly O’Dwyer, the Bill “will provide a remedy for students, who, due to the inappropriate conduct of their VET provider, incurred debts under the VET FEE-HELP loan scheme”.  This legislation will give the Secretary of the Department of Education and Training the discretionary power ‘to re-credit a person’s VET FEE-HELP balance and remit the associated debt’.  This would operate in addition to the existing provisions for re-credits.

Under the current Higher Education Support (VET) Guideline 2015, unacceptable conduct includes: being offered money, a phone/laptop or some sort of voucher or other type of inducement/incentives to sign up, being told that a course was free (or not informed that the VET FEE‑HELP was a loan that needed to be repaid), receiving unsolicited contact from a provider or its agent (cold-calling), or being dissatisfied with a provider’s response to your request to cancel a debt if you never enrolled.  Such a list again raises the question as to how VET providers were able to get away with these practices for so long. Practices, which by any country’s standards, demonstrate a lack of oversight and care by governments too focused on markets rather than a quality educational experience.

It was obvious to many VET commentators as far back as 2011/12 when the VET FEE-HELP scheme was opened up to a range of Diploma and higher level VET courses, that existing regulations were not strong enough.  TAFE Directors Australia asserted at that time:  “that until the new VET regulatory system is firmly in place, it is folly to provide open access to government training funds on the basis of demand alone.  To do so invites a repetition of practices that occurred in the international market.”  It took several years for a stronger regulatory system to be put in place, and during that time the damage was done.  The current government recognises that it does not know how many students have been affected by the VET FEE-HELP debacle and what the overall cost to the taxpayers will be.

 The reputation of the VET sector, both nationally and internationally, has suffered due to the failure of the VET FEE-HELP scheme, and more broadly the marketisation of the sector.  Enrolments in VET have fallen and the cost to taxpayers has been huge.  The VET FEE-HELP scheme cost taxpayers $7.5 billion in government funds between 2009 and 2016 (according to the National Centre for Vocational Education Research) and most of this funding went to private providers.

This new legislation appears to be another attempt to fix the broken system, but it does raise a number of questions.

  • Why is another piece of legislation required? Why were these issues not addressed when reforms to the VET FEE-HELP scheme were introduced in 2015 and 2017? Was it not apparent then that students had been financially disadvantaged by some providers who used the scheme to rort others, that these practices had not disappeared, and that there was a need for a ‘broader remedy’? According to Minister O’Dwyer, the VET Student Loans Ombudsman and the Department only discovered after the 2017 legislation that there were a significant number of students who wouldn’t have their debts remitted under that legislation.
  • Is claiming that it “will provide a remedy” an overly strong claim? The VET Student Loans Ombudsman whose position was established in 2017, received around 6405 complaints in just 12 months according to the Department of Education data.  Of these, just 0.25%, or 16 people, have had their debts waived or reduced.  This legislation may assist this process but it is hardly a remedy.  A former Careers Australia student interviewed by Triple J says that she has been passed on from one agency to another in attempting to get her $32,000 loan waived.  She has been told there is a queue and to wait.
  • What happens to students and their debts while they wait? With a VET FEE-HELP debt, many students are unable to start a new course or get a loan from a bank.  In effect, their lives can be put on hold waiting for this ‘remedy’.  At the same time their debt accrues interest, and they could be asked to repay some of the debt by the Tax Office if they have reached the tax threshold.
  • Does this remedy in any way address the stress and personal problems caused to students by this poorly conceived and implemented public policy? Minister O’Dwyer in her Second Reading Speech on the Bill, said that while it was expected that all student complaints would be resolved by the end of 2020, that this was difficult to predict and the deadlines might need to be extended.  This is at least 8 years after the opening up of VET FEE-HELP allowed a host of private VET providers to take advantage of students wishing to undertake a qualification or persuaded them to take up qualifications they did not need or were not ready for.  The media continues to report cases of students who so unhappy with the experience with their VET provider and the subsequent bureaucracy of attempting to have the rorts sorted out, are reluctant to continue their studies.  The Government however continues to deny the need for a proper investigation into what went wrong and the financial, reputational and personal cost.
  • Has this experience changed public policy relating to VET? Even without a full investigation, one would expect that public policy was changed so that we could ensure such rorts could not continue.  The new Student Loans program which replaced VET FEE-HELP provides greater protections, and action has been taken against a number of the private providers most responsible for these unacceptable practices, but the same government policies apply to vocational education and training.  There has been no acknowledgement of the problems caused by the marketisation of VET, nor the need to ensure that the public TAFE system is properly resourced to provide the industry and community focused quality education that many private providers have not.
  • Who will pay for the remit of the student debts? You, the taxpayer will.  The Government states that it will attempt to take action against the training providers responsible and have the funding returned to the government, but their record to-date is not hugely successful, considering that a number of these private providers have closed up business.

The last question is perhaps the most important for those students who through no fault of their own have been caught up in this fiasco.  When will they be paid?  We can hope that the pressure of an upcoming election will help to focus the minds of both major parties on ways that they can ensure that these students will have their VET FEE-HELP debts waived, and soon.

Linda Simon has been a teacher in schools, TAFE and now at university. She currently teaches subjects relating to adult education at Charles Sturt University. She was Secretary of the TAFE Teachers Association for over fifteen years, and Federal TAFE President of the Australian Education Union for six years. Currently she is National Convenor for Women in Adult and Vocational Education (WAVE), Secretary of AVETRA, and an organiser of the TAFE Community Alliance. She has served on the Boards of NCVER and BVET in NSW, and is an educationalist and researcher committed to equity and public education.

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