Income Contingent Loans for the VET Sector - the experts respond
16 Feb 12
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Abstract
There were a number of articles responding to the to the Prime Minister's announcement that the Commonwealth will negotiate with states and territories to set up an income-contingent loans scheme for vocational education and training students, similar to that offered to university students. It is likely to cover diplomas and advanced diplomas in engineering, computing and IT, architecture, building, community services, social sciences and health. This briefing brings together the key responses across the sector picked up by the Australian press.
Topics:
Income contingent Loans for the VET sector
There were a number of articles responding to the to the Prime Minister's announcement that the Commonwealth will negotiate with states and territories to set up an income-contingent loans scheme for vocational education and training students, similar to that offered to university students. It is likely to cover diplomas and advanced diplomas in engineering, computing and IT, architecture, building, community services, social sciences and health.
This briefing brings together the key responses across the sector picked up by the Australian press.
VET Loans is wolf dressed as sheep: greens, The News, 2 February 2012
However the Greens have gone on record as saying that HECS-style loans for vocational education students is "a wolf in sheep's clothing".
They are concerned that private providers will use it as a green light to increase fees. This they argue is what has occurred in Victoria, where a system to subsidise vocational courses has run for three years. Since 2008, diploma fees in Victoria have trebled and now dwarf the costs of a diploma in any other state,
Martin Riordan of TAFE Directors Australia welcomed the announcement because it put VET students on a more equal footing with higher education students as far as access is concerned but he echoed the concerns identified by the Greens "[Quality] was sadly lacking in Victoria, where so much of the extra expenditure on skills appeared to be spent on courses that had little to do with jobs in skills shortage areas."
Julie Hare, Vocational training loans are open to rorting, HECS creator warns, The Australian, 24 January 2012
Bruce Chapman, the architect of HECS, said "the decision was right in principal, but he warned there must be strict caveats on how it was applied to ensure it was not open to rorting by private training providers".
Robin Shreeve, chief executive of Skills Australia, said the government should be able to use levers such as pricing mechanisms to influence student choice but he also pointed out that vocational education had a very different student profile to universities, so that in skills shortage areas the nature of the loan might be different," he said.
ANU economist Chris Ryan said the introduction of HECS for vocational education would let providers increase fees without affecting demand. It was also an important equity measure because without upfront fees, there were no barriers to entry.
Emma McDonald, Plan to defer TAFE fees, The Canberra Times, 2 February 2012
CIT director Adrian Marron said the announcements were positive but ''the devil will be in the detail''.
While Victoria has been trialling income contingent loans to VET students, Mr Marron said ''there are lessons to be learned from the Victorian experience in relation to the mechanics of implementing the system''.
The CIT was aware that fees acted as a financial barrier to education and training for many students and already offered concessions such as 50 per cent off fees for students with a Centrelink card.
Mr Marron said the wide variety of courses, course lengths, fee structures and existing concessions would all need to be taken into account when constructing and negotiating the new HECS-style loans.
Julie Hare and John Ross, Experts say loan plan for vocational diplomas will increase students' payments, The Australian, 2 February 2012
Leesa Wheelahan argues that Gillard's plan to introduce income-contingent loans for vocational diplomas is likely to dramatically increase what students pay, with little or no impact on skill shortages, because colleges would take advantage of the loans to boost fees for students.
Victorian diploma fees have tripled to $2500 since the state implemented similar reforms in 2008, making them the most expensive government-subsidised diplomas in Australia.
Government-subsidised advanced diploma fees cost $990 a year in Tasmania, $1212 in Western Australia, $1350 in the ACT and $1570 in NSW.
At the same time there are questions over whether the Victorian reforms have increased student numbers, or simply shifted private, fee-paying students on to the public purse.
Gavin Moodie, Roadmap to increase diploma enrolments still on drawing board, The Australian, 8 February 2012
The different student fees, loans and entitlements for vocational and higher education programs make it more difficult than ever for students to transfer between and combine studies from the two sectors.
So it is good that the federal government is proposing HECS-style fees and loans for vocational diplomas and advanced diplomas. ...
Workforce competition has also led to bachelor enrolments increasing strongly while diploma enrolments remain flat overall. The national agreement for skills and workforce development adopted by the Council of Australian Governments in 2008 aims to double the number of diploma and advanced diploma completions between 2009 and 2020. The COAG reform council advised that additional effort would be needed to meet this target, and introducing income-contingent loans for diplomas would be a good start.
However, bigger changes would be needed to increase diploma enrolments substantially, since vocational education continues to follow rather than lead tertiary education policy.
The removal of caps from university bachelor enrolments has increased the pressure on diplomas, which are still capped -- something COAG should resolve if it wants to meet its target. ...
It would be a great pity if income-contingent loans made vocational diplomas less valuable. But important information about the design and funding of HECS for VET has yet to be released.
The state and federal governments should release their proposals and counter-proposals at least a fortnight before COAG. This is done by US higher education commissions. It improves public policy development and increases general understanding and acceptance of new policies.
John Ross, HECS for VET: A smokescreen AEU, The Australian, 26 January 2012
Australian Education Union TAFE secretary Pat Forward suggested there was little evidence VET students had been put off by the "modest" up-front costs.
"It is disappointing to witness a Labor government launching its new year vision of a more skilled nation on the promise of giving working class and disadvantaged young people the same right to incur debt as university students," Ms Forward said in a letter to the Prime Minister.
"It masks a significant policy shift in the VET area ... to shift the funding of vocational education away from governments and onto individual students."
Australian Council for Private Education and Training said that compared to low-level vocational students, those undertaking diplomas enjoyed greater personal returns through bolstered earnings and more secure employment.
"Is it reasonable to ask that group of students to take on some of the more real cost of their learning?" asked CEO Claire Field.
"I think the answer is yes. That then frees up government funding to support people in lower level courses, where the returns aren't quite as great, to allow more people to enrol in those courses."
Ms Field said ICLs were the fairest way of raising diploma fees because they allowed repayments in small instalments once students were reaping the benefits.
She said ICLS were critical to making VET reforms work well, and that the reforms needed to be seen in their entirety.
So far, the only state that has introduced full market reforms - and won the right to offer ICLs for government-subsidised diplomas - is Victoria.
The original Announcement is available at: http://www.theaustralian.com.au/higher-education/opinion/our-skills-and-innovation-provide-leg-up-for-the-future/story-e6frgcko-1226250747145
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