No Quid Pro Quo: Loophole Gifts For Profit Colleges Public Funds Without Scholarships


A loophole in Christopher Pyne’s higher education legislation package will mean the majority of private providers – including ‘for profit’ institutions – will be exempt from contributing funds to a Commonwealth Scholarship Scheme, despite being given access to hundreds of millions of dollars in public funding.

The Scheme is a key component of Pyne’s deregulation reforms and mandates that higher education providers use up to 20 per cent of new revenue to help fund scholarships for disadvantages students.

The revelations follow ongoing controversy over the awarding of a secret $60,000 scholarship to Prime Minister Tony Abbott’s daughter Frances, by private for profit college Whitehouse Institute of Design. Whitehouse’s website still advertises that it does not provide scholarships to students.

In a submission to a Senate committee inquiry examining the legislation, the Australian Catholic University (ACU) has warned a significant portion of private providers will not be forced to make contributions because of an exemption for institutions with a lower number of students.

“The Bill proposes that only providers with an equivalent student load of at least 500 or more full-time domestic students will be required to participate in the Scheme, which would exclude many private providers but effectively require that all universities participate,” the submission said.

Larry Davies, CEO of the Australian Council for Private Education and Training, confirmed the majority of private providers have less than that number of students.

Both The Greens and Labor told New Matilda they were concerned for profit colleges would dodge the Scholarship Scheme even though other parts of the legislation will grant them access to a new $800 million pool of Commonwealth funding.

Shadow Minister for Higher Education Kim Carr said it was a “remarkable coincidence” that many private institutions, some of which are significant Coalition donors and have close ties to the party, will likely end up being exempt from the Scholarship Scheme.

“It’s a competitive advantage that private providers will have,” he said.

“But that is only part of the difficulty – as the Vice-Chancellor at Catholic University has pointed out, there’s been a range of other questions about the culture of business operations of private colleges.”

Greens Senator Lee Rhiannon said she would pursue the issue in Senate Estimates.

“The proposed Commonwealth Scholarship scheme has already been exposed as a sham as universities will be forced to lift their fees by at least 20 per cent before a single dollar flows into the funding pool,” Rhiannon said.

“Now real concerns are being raised by the university sector that the vast majority of private colleges won’t have to spend a cent on the scholarships as they enrol too few domestic students.”

A spokesperson for Education Minister Christopher Pyne said the exemption for organisations with less than the 500 student equivalent was included after consideration was given “to the capacity of providers to establish and manage the scheme balanced against the potential benefits to students”.

“Because of the administrative demands of creating and running such a scheme, it was decided to set a minimum number of students in an institution, public or private, before such an obligation arose,” they said.

In Parliament this week, Labor attacked Pyne’s legislation and warned uncapping fees and increases to the interest rates of student debt repayment, forecast to be particularly harmful for women, would lead to the ‘Americanisation’ of Australia’s higher education sector, and work to the detriment of regional students.

In response, the Minister for Education argued the Scholarship Scheme would ensure vulnerable students would not miss out.

Asked whether he believed it was fair that so many private institutions would be exempt from the Scheme, Davies said it was wrong to pick out a single part of the legislation.

“I think you’ve got to look at the whole picture. You can’t just single out one piece of it and say that’s not fair or this isn’t fair,” he said.

He said it remained unclear how much of the $800 million pool would actually end up flowing to private colleges.

Currently locked up in a committee inquiry, the legislation looks unlikely to pass the Senate in its current form, with the Palmer United Party vowing to vote it down.

But with the PUP avoiding questions about specific components of the package, the opportunity for Pyne to reintroduce key measures including the uncapping of higher education fees and extension of public money to private colleges could still take place should the current package fail.

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.