The Commonwealth Government has announced a complete overhaul of its student loan scheme for vocational education and training. It has scrapped the 'VET FEE-HELP Scheme' which has been plagued with controversy and intends to replace it with a new scheme named 'VET Student Loans'.

The new scheme

Provided the relevant legislation is passed by Federal Parliament, from 1 January 2017, the new 'VET Student Loans' program will replace the current VET FEE-HELP Scheme.
The key differences with the new scheme include:

  • Limited course availability: The Government will restrict the types of courses that are eligible for student loans. The Minister has indicated that the number of eligible courses will be reduced to around 300 or 400 from currently over 800 following a consultation process.
  • Loan caps: The amount of a student loan under the program will be capped at either $5,000, $10,000 or $15,000 depending on the cost of the court delivery. Providers will be entitled to set tuition fees above the cap but the government loan will not exceed the cap.
  • Student engagement: Students will be required to demonstrate course progression and log in and engage with the VET Student Loans online portal.
  • Enhanced provider application process: A new provider application process which the Government states will involve a much higher bar to entry by assessing an applicant's financial performance, governance, relationships with industry and higher education providers, student completion rates, employment outcomes and experience.
  • New payment conditions and powers: Enhanced payment conditions, including capping loan amounts and monthly payments in arrears based on actual enrolments and new powers to suspend poor performing providers including freezing payments and remission of student debts.
  • Marketing/enrolment restrictions: Ban on the use of brokers and marketing agents and limits on subcontracting of training.

The Government has not announced any amendments to the tuition assurance arrangements and continues to advertise that there are only two established tuition assurance schemes.

What this means for current or new VET Providers

  • Provisional approval: Current providers will be, subject to meeting key selection and eligibility criteria, granted provisional approval as a provider for a six month transition period from 1 January to 1 July 2017. Provisional approval allows the provider to enrol new students in units of study which can be completed by 30 June 2017.
  • Formal approval required: All private providers will be required to apply for formal approval under the new scheme. It is expected that applications will be open either at the end of 2016 or early 2017. Approved providers will be entitled to enrol new students from 1 July 2017.
  • Review policies and procedures now: VET Providers should expect a rigorous application process and we recommend a review of all company policies and procedures in the lead up to a new application, with a particular focus on service delivery, student engagement and marketing and enrolment practices.
  • Important to get it right first time: The Commonwealth Department of Education and Training has indicated that the onus will be on applicants to supply all relevant information and incomplete applications will not be accepted and in such circumstance the applicant will be required to resubmit an application the following year. The Department will only accept additional information in limited circumstances.
  • Current students: Current VET FEE-HELP students will be given the option to continue their under the current VET FEE-HELP scheme through to the end of 2017. Existing providers will be entitled to continue to teach these students until the end of 2017. If a student does not inform the Department that they would like to continue under the current scheme, their access to VET FEE-HELP will cease on 31 March 2017.