Up to 40 per cent of VET FEE-HELP loans will never be repaid. Source: Getty Images
March 2015 - News.com.au
Careers Australia Education Institute signed up 6,165 students to the popular course in 2013 — an extra 5,266 students from the year before — for a total of $51,227,115 worth in government loans.
That represented a 586 per cent increase in students on 2012.
At the same time, the Australian College of Training & Employment, trading as Evocca College, signed up 4,047 students for $39,127,500 worth of government loans. That represented an additional 1,858 students on the prior year, or a 118 per cent increase.
Only two other private colleges came close: Productivity Partners Pty Ltd, trading as Captain Cook Colleges, signed up 736 students for $6,064,000 worth of loans, while Study Group Australia Pty Ltd, trading as Taylors UniLink, signed up 330 students for $3,259,670 worth of loans.
The Business Diploma gold rush highlights just part of the bigger picture, with growing signs of a crackdown on the current sector arrangements which allow private colleges to make massive profits through state and federal government funding.
Senator Simon Birmingham last week announced audits of 23 colleges. Source: Supplied
A Senate inquiry into the vocational education and training sector will table its first interim report today. The report is expected to raise concerns about the vast profits being made by private companies, with public hearings in coming months tipped to focus on the economics of allowing for-profit vocational training.
According to a University of Sydney study, some of Australia’s largest training companies have reported profit margins of more than 50 per cent.
Figures released by Assistant Training Minister Simon Birmingham last week revealed the government spent $1.615 billion in VET FEE-HELP loans last year for 189,000 students at 254 training providers, representing a blowout of $315 million.
Modelling by the Grattan Institute estimates 40 per cent of those loans will never be repaid, as many debtors’ salaries won’t reach the repayment threshold of $53,345, meaning taxpayers will foot the bill.
Education Department data shows only 26 per cent of the 30,595 students who enrolled in vocational education and training FEE-HELP courses in 2011 finished their course within three years, with just 7 per cent completing their online course.
Senator Birmingham last week announced audits of 23 colleges to investigate “allegations of unscrupulous marketing and other practices intended to exploit” the VET FEE-HELP system.
In its submission to the Senate inquiry, the Redfern Legal Centre highlighted the case of one of its clients, ‘John’, a Disability Support Pensioner who lives in public housing in Surry Hills in inner Sydney.
John is from a non-English speaking background and suffers from acute mental illness, including schizophrenia and trauma-related illness.
“In early 2014, a door-to-door marketing agent, acting on behalf of a [registered training organisation], knocked on John’s front door,” the Centre wrote.
“The marketing agency was very pushy and kept telling John he would receive a free laptop and tablet — all he needed to do was sign up for this ‘free government funded course’.”
According to the Centre, John was enrolled in two different ‘business management’ style courses with two separate RTOs. With the help of his social worker, John found a few months later that he would be liable for more than $10,000 in course fees.
“John’s story highlights the impact of misleading and deceptive marketing practices, which target and exploit vulnerable consumers,” the Centre wrote. “Unfortunately, John’s case is far from uncommon.”
Frank Chung
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