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Loans a 'wholesale' funding shift: AEU

THE Australian Education Union says a plan to increase training and remove the up-front costs, through HECS-style loans and a new training 'entitlement', could achieve the opposite of the stated policy intention.

Last week’s Council of Australian Governments meeting agreed to guarantee training up to certificate III, the typical level of apprenticeship qualifications, and to introduce HECS-style loans for government-supported diplomas.

The federal government said the loans would help students avoid upfront fees that could exceed $3000 a year. But the AEU said they’d provide a smokescreen for states to jack up their fees.

“The new agreement will lock future generations of Australian students into debt and oversight a wholesale [funding] shift away from governments and onto individuals,” said federal TAFE secretary Pat Forward.

The only jurisdiction that currently charges around $3000 is Victoria, where diploma fees tripled to $2500 after loans were introduced in mid-2009. Fees for some Victorian advanced diplomas have since risen above $5000 after the government abolished maximum fees last October.

Elsewhere government-subsidised advanced diploma fees cost much less – $990 a year in Tasmania, $1212 in Western Australia, $1350 in the ACT and $1570 in NSW.

South Australia, which signed up to the loan scheme in February, has set a maximum fee of $7000 for two or three year diplomas. But Higher Education and Skills Minister Tom Kenyon said providers could charge less, with most fees expected to remain below a current cap of $2275.

However, history suggests that maximum fees are imposed when up-front costs are deferred through income-contingent loans.
When federal education minister Brendan Nelson increased the ceiling on higher education fees in 2005, all universities moved to the new maximums. UK universities took a similar approach in that country’s recent higher education reforms.

Under the COAG agreement, the “weighted average loan value” this year will be $4000, rising to $5000 from mid-2013. Ms Forward said she believed governments would raise their fees to these limits.

And she said they could use the loans to justify removing subsidies for diploma and certificate IV courses altogether, because the COAG agreement only obliged them to subsidise training up to certificate III.

The CEO of Sarina Russo Schools, Kathleen Newcombe, said she thought state governments would maintain subsidies for higher level courses. “At the heart of their interests [is] making sure they’ve got the right workers to fill the needs of industry,” she said.

The AUE predicted the opposite because states would no longer have to subsidise training for ‘second chance’ students. This is because, in an approach also borrowed from Victoria, the entitlement only applies to people’s initial qualifications – allowing states to charge full fees from people retraining for career changes or because their job prospects had dried up.

Ms Forward said other states had distanced themselves from the Victorian approach, under which subsidised courses are only available for progressively higher level qualifications.

“All the rhetoric from South Australia and Queensland [suggested] Victoria had made a mistake and there should be at least a second go,” Ms Forward said.

SA’s new system, which starts on July 2, includes subsidised courses up to advanced diploma level with graduates allowed at least one more course irrespective of their prior qualifications. Mr Kenyon said SA didn’t intend to “water down” these commitments.

But Queensland’s new government has backed away from a Labor commitment to subsidise retraining students, albeit at a lower level than first-timers. A spokeswoman for Education, Training and Employment Minister John-Paul Langbroek said this commitment was now under review.

NSW, Western Australia and Tasmania have also kept their training reform plans under wraps. NSW bureaucrats have drafted reform recommendations but wouldn’t release them ahead of the COAG discussions. WA was expected to announce its plans last year, but now says this won’t happen before the end of June.

Ms Forward said states were now unlikely to subsidise subsequent qualifications. “If you were a state government training bureaucrat you’d be much better off under the agreement they’ve just signed at COAG,” she said.

However governments stressed that these were minimum criteria only. “Jurisdictions are encouraged to go beyond the minimum, where affordable,” the agreement says.

Meanwhile, doubts remain whether vocational students will accept the new loans, with many people from disadvantaged backgrounds considered debt-averse.

Only 22,000 diploma students have so far signed up for Victoria’s loan scheme, even though the state had 71,000 government-subsidised diploma enrolments in 2010 and 87,000 in 2011.

Last year the federal government reviewed the Victorian loan scheme, and said it had proven popular with socioeconomically disadvantaged people including indigenous and regional students. But the government hasn’t released the review.

Ms Newcombe said the loans scheme needed more time. “Once it becomes more mainstream we’ll see a take-up of it – a lot of it is about information and trust.”