Senate Concerned At Aggressive Sales Tactics, Growing Student Debt In 'For Profit' College Sector


Federal Parliament is probing the growing volume of taxpayer funding flowing to ‘for profit’ Vocational Education and Training providers, with a senate committee flagging aggressive marketing in the sector and low rates of debt repayment by students.

The inquiry follows so far unsuccessful attempts by the Coalition in the 2014 budget to shift more than $800 million in taxpayer funds from the public education system into a scheme that can be accessed by the private ‘for profit’ sector.

In an interim report tabled in the senate on Monday evening, the Education and Employment References Committee pointed to research suggesting as much as 40 per cent of the funds lent to VET students by the Commonwealth will go unpaid, leaving taxpayers short-changed but insulating the profits of private providers.

“The committee is concerned about the link between access to government funding and a subsequent increase in targeted marketing, particularly that which de-emphasises the real cost of undertaking VET and misconstrues the costs associated with VET FEE-HELP,” the report said.

In 2009 VET FEE-HELP was added to the HELP scheme, meaning students studying at VET providers could receive a loan to cover their fees, taking on a debt to the government to be repaid once they start earning over $53,000 per annum.

Students can borrow more than $80,000 and since the introduction of the scheme, the cost of VET delivery has grown rapidly.

“The committee notes that government payments to non-TAFE providers for VET delivery was $523.4 million in 2008, compared to $1,362.8 million in 2013,” the interim report records.

The funding flowing to private institutions for FEE HELP now far exceeds that going to public TAFEs.

“The committee notes Sydney University Research commissioned by the Australian Education Union, claiming that in 2014 the VET-FEE funding to for-profit providers was $592.6 million compared with $177.5 million for state-administered TAFE institutes,” the report said.

The interim report is the first stage of a wide-ranging inquiry exploring the marketing techniques, regulation, and funding of private VET providers.

While public hearings have not yet begun, the committee has received 50 submissions.

“In a submission to this inquiry, the Australian Council for Private Education and Training (ACPET) argues that 'VET FEE-HELP has created greater choice for students, and created real opportunities for students who would not have had the opportunity without the program',” the interim report said.

But it also noted the committee had received “a number of submissions that highlight concerning reports of aggressive marketing techniques used by private education companies and education brokers”.

When the inquiry was established in November last year, Labor and Greens senators told New Matilda it could have big implications for Christopher Pyne’s higher education deregulation legislation, which remains before the parliament.

The interim report hints this line of inquiry will be pursued in further hearings.

It will also look at the rorting of government funding, an issue that has consistently reared its head in the media in recent years, and at concerns of the level of political donations from for profit colleges.

Victorian company Vocation, and NSW-based Australasian Colleges have both faced investigations, with the former accused of lax standards and a “tick and flick” strategy.

In addition to these two, a third private college, Group Colleges Australia, was named in the inquiry’s terms of reference, but all three names were dropped at the insistence of Labor.

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