The private colleges rort bleeding the Budget

By Leith van Onselen

Last month, The Australian released three articles (here, here and here) uncovering widespread rorting by private colleges. The Australian revealed that private colleges were handed more than $1.4 billion in government-funded VET Fee -Help loans last year, which was four times as much as was provided to public vocational education and training providers. Yet, only 14,400 students managed to complete courses at private colleges last year, compared with 18,400 students at TAFE and other public providers. Thus, the figures reveal that private colleges are inflating course costs but providing very poor educational outcomes.

The Australian’s Judith Sloan neatly summarised the problem as follows:

Fly-by-night operations could lure students to expensive, inadequate courses and send the bill to the federal government. Students were urged to take loans on the understanding they would not have to repay the principal…

Fairfax Media has also identified a series of rorts in the private colleges industry.

On Friday, Fairfax published a worrying report about how some in the “vocational education sales industry” are targeting poor areas, providing them with “free” laptops if they sign-up to an expensive online diploma course. In the process, the education providers pocket thousands of dollars in fees for students that will in all likelihood never finish their courses, courtesy of the Australian taxpayer.

Then on Monday, Fairfax uncovered that a federal government back-to-work scheme has been used to supply workers to a company that uses ‘boiler room’ tactics to sell expensive diplomas to the unemployed.

Today, The Australian has reported that Australian taxpayers have paid over $1 billion to 15 private colleges this year – colleges that have been found to be in breach of government regulations. Five more colleges have also failed compliance audits:

The Australian Skills Quality Authority [ASQA] has slapped conditions or threatened to deregister 15 of 22 training outfits targeted in special audits this year.

The colleges have together pocketed $1.02bn in taxpayer funding through the VET FEE-HELP scheme this year alone.

ASQA said yesterday it had told two colleges — Cornerstone Investments and the Australian Institute of Professional Education — it intended to cancel their registration. The regulator has already deregistered two providers: Unique International College and the Phoenix Institute. Both plan to appeal against the decision.

Separately, the consumer watchdog has prosecuted Unique International and Phoenix Institute, and is investigating up to eight others, over allegations that they engaged in unconscionable conduct when signing up students for costly training courses.

Thankfully, change is afoot with the Turnbull Government putting forward legislation, currently under review in the Senate. According to another report in The Australian, the new rules would:

…split payments into three tranches, based on “census dates’’ to prove a student is still actively studying.

Its legislation grants wider ­investigatory powers to the industry regulator, the Australian Skills Quality Authority.

And it imposes fines of up to $54,000 for each regulatory breach, potentially applied for each student affected.

Colleges would be forced to seek parental permission before enrolling teenagers, and students would get a two-day cooling-off period to back out of a training course.

Vocational Education and Skills Minister Luke Hartsuyker is considering even tighter controls, including regulating tuition fees and confining VET FEE-HELP to courses of economic benefit, such as trades, healthcare, aged care, childcare and computing.

A Senate committee is due to report on the legislation on Monday, with the new anti-rorting rules expected to take force from 1 January 2016.

They cannot come soon enough.

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  1. And what did Abbott and Pyne want to do?

    They wanted to expand federal funding for private educational institutions…including (coincidentally of course) the one that gave his Abbott’s daughter a $60,000 scholarship that is only “occasionally” granted.

    Mr Abbott was again questioned on Friday about the $60,000 scholarship from the Whitehouse Institute of Design awarded to his daughter Frances.

    Institute chairman Les Taylor has made donations to the NSW Liberal Party and has known Mr Abbott for many years. He has also given Mr Abbott, when he was opposition leader, clothing on two occasions which have been declared on the members’ interest register.

    However, an institute scholarship worth up to $60,000 given to one of Mr Abbott’s daughters, Frances, has not been declared on the register.

    The federal budget has introduced direct financial grants for students taking courses in private colleges and TAFEs.

  2. TailorTrashMEMBER

    Meanwhile TAFE is stripped of funding and resources and their campuses and facilities full of great equipment are empty as the crooks steal all the
    “Education ” funding ………another example of government failure ………..I hope they are claiming back the funds that these sham operators have STOLEN !!

    • This is correct and those strategic sites will be sold for redevelopment and students have far less choice of location for training.

      • TailorTrashMEMBER

        In my retirement I went to TAFE and did a 3 year course to enhance a skill that I had as a hobby during my working life . My personal experience left me mpressed with the facilities but more so with the knowledge and skills of the teachers I interacted with many of whom had gained them in the now disappeared Australian manufacturing sector . These teachers could impart not only theory but a breadth of lifetime experience . Now to see these great facilities becoming empty is a tad sad and I agree that sale for “development ” is their fate ……….and what will that development be ? ………easy to guess ….apartments for sale to non citazens ……or to be slums for underpaid ,uneducated 457’s and fake students brought in by the new “market orientated education
        providers ” who will replace these TAFE collages ……….pathetic …..but another sign of the decay of a great country ……..

      • One would think that Australians would be furious at the damage to the reportedly excellent TAFE system, and that white-anting it would be political suicide, but nope. The amount of “I’m alright Jack, so who cares” in Australia is astonishing. Money spent on TAFE is ‘no-brainer’ expenditure; for every tax dollar you put in, I’ll bet you get more than one back within a few years.

        This is why I am so bearish on Australia; most of the country’s problems stem directly from the bad ideas in the its populations’ heads. No appreciation of the value of productive enterprise; it’s all just ‘equity maaaaaaate’ and tax rorts. No appreciation of the strategic value of a critical mass in design and manufacturing; don’t need none of that stuff when we can get rich selling our houses to each other and buying cheap stuff from China.

        The process of changing these ideas will be long and painful.

      • I did 1 year of TAFE in the 90s (design) to build up my folio to get into Uni, as that was the standard path way at the time. TAFE was full of practicing, passionate highly knowledgeable artists and designers. Uni was full of insulated, lazy lecturers with little or no industry experience, who proved difficult to get rid of regardless of how many complaints students lodged.

        Graphic design courses were amongst the first offered by private colleges as they sort to cash in on it’s popularity during the mid 90’s. The people they churned out were unhireable, as the courses were little more than Adobe Photoshop how-to’s.

    • The death of the TAFE system will end up being more socially destructive than the degrading of the universities. It is a crime how we deny the opportunities to the young that those before could rely on being there.

  3. Thus, the figures reveal that private colleges are inflating course costs but providing very poor educational outcomes.
    was there anyone sane thinking otherwise at any point of time?

    just look at USA for profit system – complete failure that will eventually drag the whole country down into ground.

  4. So $1.4billion for 14,400 grads. That equates to $97,000 per grad. If the courses cost circa $20k then that means only 1 in 5 go on to complete the course.

    For $97,000 you could be paying for doctors degrees.

    • Yes but I am guessing these come with student visas and a job in 7-Eleven and a four year wait for PR.

      Edit: Government liked the ‘BOOST’ it gave to GDP

      • Then you’d be guessing wrong. VET Fee Help only available to PRs and Citizens.

        Sadly the sickness in vocational education (I would say it is analogous to terminal cancer) is multi faceted:

        1) Visa rorting of full fee paying international students. This is actually still pretty rife but has been somewhat tamed since labor’s tightening up of student credentials and course operators. Here the student pays for 100% of course costs. Usually though they only care about being able to work here and eventually get PR.
        2) The rorting of state govt paid for courses in supposedly in demand courses. This is what has gutted the TAFE’s as hundreds upon hundreds of millions of dollars of funding have been allocated to aggressive private colleges better able to con students into signing up. Here the state govt pays the bulk of the cost and students also pay out of pocket. The target students are Australian PR and citizens marginally attached to the workforce.
        3) The rorting of VET Fee Help (Fed govt extended income contingent loans) when the traditional state govt funding proved insufficent to line the troughs of the dodgy fly by night colleges. Again the target demo is Australian PR and citizens. Student theoretically is responsible for 100% of course cost but in reality debt will prove unrecoverable as the will never earn the $54,000 minimum before repayments start. Many of these people have no idea what they are signing up to except that they are getting free stuff.

      • @OC
        Thanks for your response. It turns out I did guess wrongly, but now I have a far better idea of the dynamics. Much appreciated.

  5. The government must take some responsibility for this mess. i work for a private college with VET FEE-HELP, but we have few students and do not exploit the system. BUT they made it so easy to do so. This is how it works: In September every year, you give the government your expected student numbers and revenue for the following year. So these big places would say they expect 2000 students, each paying $20,000. So there is $40,000,000 in expected revenue. So what do the brains in the bureaucracy do? They pay upfront 12.5% in January (5 mill), and then pay equal monthly installments for the rest of the year! These cash payments are made only on the estimates. So these dodgy colleges have their revenue locked in, their sales targets, and then they just need to find the poor shmucks to assign the revenue to (incur the “debt”).

    how does a college go from a few thousand dollars of VET FEE HELP per year, to putting in estimates of $100,000,000 within a couple of years with out some alarm bells going off in the bureaucracy?

    The thing is, there are over 4000 private colleges in Australia and a lot of them offer high quality training and operate with integrity. At the same time, if you think that the TAFEs are these amazing institutions that deliver only high quality training by great trainers, you are mistaken! Of course there are issues with some of the privates, but it is really only a few that are giving all such a bad rap.

    • While there may only be a few places that rort the system completely, pictures of the operators handing out laptops from the boot of his Benz in a public housing estate has poisoned the atmosphere. This cannot continue.
      It’s really a ‘hit or miss’ with TAFE, quality varies a lot depending on the teacher.

    • +1 It beggars belief the lack of quality control, meaningful indicators and ignorance of red flags from state agencies, ditto re. international students (a HE person wrote suggesting domestic VET takes on ombudsman etc. like international to oversee students’ interests, not management). $20k fees should have set alarm bells ringing amongst state agencies = full fee paying under grad international university fees for one year ……

      I assume domestic registration is more inputs e.g. building, desks, computers, qualified teachers, training packages etc., but misses actual teaching/learning performance, marketing/sales practices etc.

      Australia’s quality system is obviously flawed (plus unempowered personnel and/or relying upon administrative processes i.e. ‘box ticking’?) as it is unable to discriminate between quality and no quality providers? Further, TAFE’s have been supported or assumed as better quality, but again can be patchy….. and playthings or career structure for admin management.

      There will not be an intrusive VET quality control system based on real indicators of quality and performance, because TAFE (and universities) would also need to be closely scrutinised (including wider field of personnel behaviour etc.), for now the latter manage their own ‘quality’ which also means issues of quality, that can be ignored…..

      Heard that a TAFE in Melbourne had a competent teacher by required standards, but had ‘attitude’ issues (verbal racism directed at int’l and local students), took them one year to get rid of the teacher (permanent/entrenched)…. example of many indicators that are not included in the basic quality model in Oz VET….. meaning it’s not managing all required quality indicators…..

  6. Yea the new rules cant come soon enough, I know I know BUT if you dig a little deeper maybe you’ll find that a disproportionately large number of the students for these courses live in disadvantaged regions of the country. I’ve personally spoken to teachers at these regional educational institutions that were dumber than dog shite yet they had a job because the students had even less happening in the old brain box.
    Yea fixing the problem is a great idea but just be sure you understand what the problem really is.

  7. What a total unmitigated mess. And they want to put up GST up … the fast food parties are hard to even watch sometimes.

  8. If they go around fixing rorts like these they’ll totally kill the population ponzi whose health is not what it once was.

  9. There’s a flying school in Hobart that get a large part of their revenue from the VET-FEE-HELP scheme for commercial pilot’s licence training. At least this is still quality training as it is highly regulated by CASA.

    I don’t really like this business model – it produces a lot of 18-25 year old kids with a CPL, a head full of dreams, no real job to go to and a 6-figure debt to the government.

    The problem is that CASA has made it so difficult for a flying school to operate that this is really the only viable business model – if they didn’t do this then there wouldn’t be any flying schools and we wouldn’t be producing any of tomorrow’s pilots – we’d need to import them.

    • Airlines should be made to train pilots from scratch, no imports. Dito every other industry who used to train, now just parasite wherever they can.

      • Tassie TomMEMBER

        I agree to a point, although if aspiring pilots knew that this was the only pathway to a major airline, then this may make it even harder to run a flight training school.

        We need a lot more pilots than just the airlines – we need charter operations, scenic flight operations, medical retrieval, crop-dusting, mustering, and firefighting. Media, police, and emergency services also need helicopter pilots. Many people need their own plane for transport (those that live in very remote areas), and some people want one for convenience or for fun.

        I want one to be able to get to the mainland on a Friday night for a weekend (mostly for work, sometimes to visit family and friends) – the only place you can get from Tassie for a weekend is Melbourne, otherwise you’re getting ready to leave by the time you get to your destination.

      • I think the airlines do train in the sense that you won’t have a flow a jumbo before you get your first or even second pilot job but take people part of the way through the journey to airline pilot. It’s not too different from hiring grads and expecting to train them. The problem will start when they decide they will only hire pilots with 10 years plus experience flying jumbos and demand 457s to make it happen.

      • What you’re advocating has turn into ‘pay to fly’, where the pilots PAYS the airline for flying experience. This is the business model for a lot of Asian budget airlines. If the plane crash, it’s covered by insurance anyway, so management don’t care if a 1500 hour cadet is flying the plane.

  10. Here is how it works
    TAFE = socialism = bad
    Private funded by government = scam = poor result = modern crony capitalism = good because someone got rich for providing nothing much of value.

  11. Some forget the anguish Howard instigated when fiddled with the education system…. assembly line education – degree mills….

    Now academia lowers the bar to keep consumers [students] moving through the financial [leading driver] wash plant…. good times ahead – !!!!!!!!!

  12. Sorry but I see arranging VET HELP for students to get into industries where they are unlikely to earn $54k pa (at least not for a LONG time) is borderline fraud. Would be interesting if the colleges had to pay back part of debts if there students were not making repayment contributions within 5 years. May lead to some cleansing of the private sector and lead to some shutdown of marginal courses at large institutions.