Important reforms will be made to the Government’s VET FEE-HELP student loan program to prevent unscrupulous marketers targeting vulnerable Australians and exploiting taxpayers to the tune of billions of dollars.
Assistant Minister for Education and Training Senator Simon Birmingham today announced a rolling campaign of legislative and other changes to deal with rogue training providers and better protect students taking out an estimated $16.3 billion in unnecessary VET FEE-HELP loans over the next decade.
“A VET FEE-HELP loan can help students improve their lives and careers and the Government is not going to let scammers take advantage of this valuable program,” Senator Birmingham said.
“This program assisted over 180,000 students last year with more than $1.6 billion in loans, but unethical behaviour by a small number of training providers or their brokers meant too many students were signed up for courses that didn’t meet their needs or lead to job outcomes, but instead saddled them with significant debt.”
Senator Birmingham said the Government had already begun taken action against unethical marketing practices by delivering tough new national standards and introducing new laws to strengthen the regulator’s powers to deal with rogue training providers.
“After closely reviewing some of the dodgy practices being deployed, it is clear that further reforms are needed to break the business model of those unscrupulous training providers who prey on vulnerable students,” Senator Birmingham said.
"The unacceptable activities of some training providers are leaving vulnerable Australians with a lifetime of unwanted debt, taxpayers with liabilities that may never be repaid and are damaging the reputation of the many good public, private and not-for-profit training providers.
“These activities flourished under Labor’s failure to implement appropriate compliance measures when the previous Government started VET FEE-HELP in 2009, and expanded its availability in 2012.
“I am determined to stamp out these practices, which bring back memories of Labor's much abused home insulation program."
The new measures will:
- Ban providers from offering inducements or incentives to students, like cash, meals, prizes or laptops, to get them to sign up to courses that they don’t need.
- Make it impossible for providers to levy all fees in a single transaction up front, giving students more opportunity to consider their options before VET FEE-HELP debts can be incurred.
- Ban miraculously short diploma or advanced diploma courses, instead requiring a minimum number of units of study.
- Protect vulnerable students by requiring providers to properly assess students for minimum prerequisite educational capabilities before enrolment.
- Eliminate insidious practices like ’nursing home’ enrolments.
- Stop marketing agents and brokers ‘freelancing’ to sign up as many students as possible, without the training provider being held responsible for their actions.
- Give students clear information that helps them understand that VET FEE-HELP loans are real debts that impact their credit rating and are expected to be repaid.
- Ensure students sign off on high visual impact statements making it explicit the total debt they will incur should they proceed with a particular course.
- Strengthen the duty of care requirements for training providers offering VET FEE-HELP loans, including requiring more stringent capital backing for providers and a positive history in the training market.
- Make it easier for the government to cancel student debts that have been generated by training providers/brokers who breach the new guidelines, and require the training provider to reimburse taxpayers for the cost.
Senator Birmingham urged anyone considering VET study to become a savvy consumer by visiting the studyassist website at www.studyassist.gov.au and weighing up all their options before making a decision about training.
“If a training offer seems too good to be true, then it probably is. Free laptops, tablets and shopping vouchers aren’t free if they come with a VET FEE-HELP debt that you’ll have to pay back through the tax system.
"This crack down on dodgy activities will be complemented by an enhanced compliance regime, with $18.2 million budgeted to support activities like more random audits on both students and training providers.
"The Government will work with industry on the implementation of these measures, but wants to put them into place as soon as possible. For example, the ban on inducements will commence from 1 April 2015, in just 20 days’ time.
"We will be monitoring the effectiveness of these measures closely and reviewing the program again within two years. Training providers should consider themselves to have been placed on notice that further abuse of the program will result in even harsher measures."