BY MARK WARBURTON
The Department of Education and Training has announced that it will take over tuition assurance in 2018 for student loan schemes while it considers what happens beyond then.
Higher education and VET providers who wish to offer student loans must belong to such a scheme to protect their students. If the provider collapses the scheme’s enable their students to complete their course with another scheme member or elect to get a refund of fees.
The sector has long wondered whether existing tuition assurance schemes would wash up on the beach, collateral damage from the regulatory failures that led to the VET FEE-HELP debacle.
Now DET has written to providers telling them that they “may be feeling uncertain about their tuition assurance arrangements for 2018” and that it “will develop sustainable tuition assurance models for implementation beyond 2018”.
A large provider collapsing is a serious risk to the ongoing financial viability of these schemes. In 2015, Phoenix Institute was the largest VET FEE-HELP user, consuming $286 million dollars and it hit the rocks before that year’s end.
Careers Australia was second in 2015, consuming $264 million dollars before topping the league table in 2016 by gobbling up $166 million even after loan caps were imposed. It tanked in May 2017, following news it wouldn’t be approved for VSL after 30 June 2017. Senate Estimates responses tell us that nearly 9,000 students had loans when it went to the wall. Most were ‘grandfathered’ VET FEE-HELP students.
Careers Australia belonged to the TAFE DIRECTORS AUSTRALIA scheme which also covers big public VET providers. ACPET runs the other large VET sector tuition assurance scheme.
It is not clear that DET has accepted any responsibility to date. It appears content that people retain their student debts unless a provider agrees to refund money or money is returned by a tuition assurance scheme. Senate estimates responses indicate that 85% of students who hadn’t completed their VET course effectively vanished – neither opting to be grandfathered under VET FEE-HELP or transfer to VSL. A fair value loss of $2 billion for the VET FEE-HELP cohort was declared in its annual report
Meanwhile providers can sit back, relax, and wait for DET to tell them all about the “certain conditions relating to course assurance and financial requirements to cover fee assurance” to which they will have to agree as a condition for having tuition assurance.