Artboard 1Icons/Ionic/Social/social-pinterest

VET funding: What you need to know now about the VET Student Loans Bill 2016

18 October 2016

#Dispute Resolution & Litigation

Toby Boys

Published by Toby Boys, Wylie Thorpe

VET funding: What you need to know now about the VET Student Loans Bill 2016

The Commonwealth government has announced that it intends to replace the VET FEE-HELP scheme with the VET Student Loans scheme (the scheme) from 1 January 2017. As existing registered training organisations will be required to apply to be approved providers under the scheme, we break down what you need to know now and how you can plan for the VET Student Loans Bill 2016 (Cth) (the Bill).[i]

What are the proposed changes?

If the legislation is enacted, the scheme will introduce the following requirements:

  • Private providers: will be required to formally apply to be providers under the scheme. There will be strict criteria specified in rules for entry into the scheme by assessing a provider’s relationship with industry, student completion rates, employment outcomes and their track record delivering education and training. Approved providers will be able to enrol new students from 1 July 2017.[ii]
  • Fees and charges: there will now be an application fee for providers applying for approval under the scheme.[iii] There will also be an annual charge imposed on approved providers as a tax to fund the operation and enforcement of the scheme.[iv]
  • Public providers: will not be required to reapply but will be subject to the same measures as private providers as set out in the Bill.[v]
  • Courses: funding will now only be offered for courses that align with industry needs and strong employment outcomes as approved by the Minister through a courses and loan caps determination.[vi] The government has released a list of approximately 347 courses that will be eligible for funding.[vii] The government has proposed that initial loan caps be set at $5,000, $10,000 and $15,000.
  • Compliance: there will be increased compliance measures including the ability to cap student numbers and to limit course scope, paying providers in arrears and increased powers to stop poor performing providers from using the scheme by cancelling payments and revoking approval.[viii] Compliance action will continue to include measures such as compliance notices and audit requirements.
  • Regulatory powers: there will be enhanced regulatory powers by incorporating the powers under the Regulatory Powers (Standard Provisions) Act 2014. This includes monitoring and investigation powers and enforcement provisions such as civil penalties, infringement notices, enforceable undertakings and injunctions.[ix]
  • Personal liability: there will now be personal liability for executive officers of approved providers for contravention of the civil penalty provisions or the commission of any offences.[x]
  • Advertising: the Bill retains the ban on prohibited inducements and directly soliciting prospective students (including cold calling and use of third party contact lists).[xi] There is also a ban on providers using brokers or agents to interact or engage students, including enrolling students in courses, assisting students to complete applications or providing information and advice on the scheme.[xii]
  • Sub-contracting: approved providers will only be permitted to subcontract training to other approved VET Student Loans or higher education providers accredited by the Tertiary Education Quality Standards Agency.[xiii] Individual subcontractors not falling into these categories may be approved in writing on a case by case basis only.
  • Student engagement: from 1 July 2017 students will need to actively engage in the scheme by logging into an online portal to ensure they are legitimate and active enrolments.


What are the proposed transitional arrangements?

If the legislation is enacted, the following transitional arrangements will apply: 

  • No new providers: no new providers under the VET FEE-HELP scheme will be approved from 5 October 2016.
  • No new students: no new students will be approved under the VET FEE-HELP scheme from 1 January 2017. Existing VET FEE-HELP providers will be closely monitored for rapidly increasing student enrolments before the commencement of the scheme.
  • Provisional approval: current VET FEE-HELP providers will need to apply for provisional approval to be a provider under the scheme for the transition period of 1 January 2017 to 30 June 2017. To be granted provisional approval, providers will be assessed against suitability criteria in accordance with rules made by the Minister.[xiv] Existing VET FEE-HELP providers who do not meet these criteria will not be approved for the scheme from 1 January 2017 and will have to seek formal approval under the scheme, with any approval not commencing before 1 July 2017.
  • Existing students: enrolled with existing VET FEE-HELP providers will continue to be able to access the VET FEE-HELP scheme for units of study that start before 1 January 2018. 


What can existing providers do now?

Courses: review the list of courses that are eligible for funding under the scheme. The government has invited feedback on the courses that will be eligible for funding by 23 October 2016.[xv] Feedback received through this process will be used to inform current and future versions of the course list.

Provisional approval: providers should start considering their applications for provisional approval which may require information about the provider’s financial performance, management and governance, experience in providing vocational education, scope of courses, fees and modes of delivery for courses, student outcomes and industry links. This will also include whether the provider is subject to an active compliance action and their compliance history.

Provider eligibility: the government has released a guide to the criteria which providers will be assessed against for approval under the scheme.[xvi] Providers should review the criteria and start compiling evidence and preparing responses to the criteria. The onus is on the provider to submit a complete application with material that supports their application.

Application date: the government has indicated that applications will open towards the end of 2016. Providers should continue to monitor the application date.


Holding Redlich will monitor the passage of the Bill through Parliament and provide additional updates as further information is released.

AuthorsToby Boys and Wylie Thorpe

[i] The other bills in the package are the VET Student Loans (Consequential Amendments and Transitional Provisions) Bill 2016 (Cth) and the VET Student Loans (Charges) Bill 2016 (Cth).

[ii] VET Student Loans (Consequential Amendments and Transitional Provisions) Bill 2016 (Cth), Schedule 2, section 9.

[iii] VET Student Loans Bill 2016 (Cth), section 31; explanatory memorandum page 4. 

[iv] VET Student Loans (Charges) Bill 2016 (Cth), sections 6-7. The amount of the charge or the method for calculating the charge will be prescribed by regulation.

[v] VET Student Loans (Consequential Amendments and Transitional Provisions) Bill 2016

(Cth), Schedule 2.

[vi] VET Student Loans Bill 2016 (Cth), Part 2, Division 3 “Approved Courses”, section 16.

[vii] See https://docs.education.gov.au/node/41991

[viii] VET Student Loans Bill 2016 (Cth), Part 4, Division 3 “Revoking and Suspending Approvals” and Division 5 “Ensuring compliance.”

[ix] VET Student Loans Bill 2016 (Cth), Part 8 “Regulatory Powers.”

[x] VET Student Loans Bill 2016 (Cth), Part 5, Division 6 “Personal liability for executive directors.”

[xi] VET Student Loans Bill 2016 (Cth), Part 5, Division 5 “Marketing.”

[xii] VET Student Loans Bill 2016 (Cth), section 49.

[xiii] VET Student Loans Bill 2016 (Cth), section 15.

[xiv] See VET Student Loans (Consequential Amendments and Transitional Provisions) Bill 2016 (Cth), Schedule 2, sections 3 and 4.

[xv] Feedback can be provided to VETStudentLoans@education.gov.au. Feedback must be received by 23 October 2016. The Department has requested that any emails are entitled “Feedback on the eligible course list”.

[xvi] See https://docs.education.gov.au/node/41941 


Contacts:

Melbourne
Chris Brodrick, Partner
T: +61 3 9321 9804
E: christopher.brodrick@holdingredlich.com

Sydney

Greg Wrobel, Partner
T: +61 2 8083 0411
E: greg.wrobel@holdingredlich.com

Bede Haines, Special Counsel
T: +61 2 8083 0447
E: bede.haines@holdingredlich.com

Brisbane
Toby Boys, Partner 
T: +61 7 3135 0649
E: toby.boys@holdingredlich.com


Disclaimer

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this publication is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources.

Toby Boys

Published by Toby Boys, Wylie Thorpe

Share this