Tertiary education providers—more regulation for some and less regulation for others

In the last sitting week of Parliament for the year, the Government changed regulatory requirements for tertiary education providers with the passage of the Education Services for Overseas Students (Streamlining Regulation) Bill 2015, and the Higher Education Support Amendment (VET FEE-HELP Reform) Bill 2015. It is timely to take stock of Australia’s fragmented approach to the regulation of the tertiary education sector.

The tertiary education sector has a multitude of regulatory bodies and frameworks:

  • for higher education (university) providers, the regulator is the Tertiary Education Quality and Standards Agency (TEQSA). As most universities (save the Australian National University) are also established under state and territory legislation, there are also state and territory reporting requirements in addition to those imposed by the Australian Government

  • most vocational education and training (VET) providers are regulated by the Australian Skills Quality Agency (ASQA). However, not all states referred their regulatory powers to the Commonwealth—VET providers that only enrol domestic students in Victoria and Western Australia are still monitored by state-based regulators and

  • for those providers that have international student enrolments, there is an additional regulatory framework, known as the ESOS framework. This places additional requirements to those instituted by ASQA or TEQSA on these providers.

There are also a range of funding sources:

  • the Higher Education Loan Program (HELP) for student loans is governed by the Higher Education Support Act 2003 (HESA), which also covers most other higher education funding and

  • most funding for the VET sector is provided by state and territory governments, although the Australian Government also provides additional funding and runs its own apprenticeship programs.

The resulting complexity means that, on a practical level, both students and providers are likely to face an array of different requirements. Consider the following examples.

Funding and payment

A private VET provider enrols a variety of domestic and international students. The domestic VET student might be partly subsidised by the state or territory government to attract students into qualifications leading to professions where there are identified skills shortages, such as early childhood education or aged care. The international student will not attract the subsidy.

The ESOS framework includes rules on what fees providers can charge international students and protection in cases of default. The recent amendments removed a restriction on international students paying more than 50% of their fee up-front; now they can choose to do so. This was seen as a reduction in ‘red tape’.

Domestic students who undertake a Diploma-level qualification qualify for a VET FEE-HELP (VFH) loan. Under changes due to take effect from 1 January 2016, each long-term course has to be divided up into four ‘study periods’ and, as a result, a VFH student can only be charged 25% of the loan debt per study period. In contrast, domestic students who do not take up a VFH loan have to pay their course fees up-front in full.

These payment arrangements mean that one VET provider may have to implement three different payment systems, and keep track of multiple funding sources, depending on their student intake. This may also increase staff training requirements and general administrative compliance.

The use of provider and student standards

Beyond the differences in who gets to pay when and how, other recent changes also affect the relationship between VET providers and the Australian Government. The VET FEE-HELP Reform Bill 2015, as amended by the Government in the Senate, included the following extra requirements:

  • minimum standards for student entry into VFH courses

  • minimum trading histories for VET providers who wish to offer VFH and

  • powers for the Minister for Education and Training to audit the performance of a VET provider who offers VFH loans to its students.

As these changes will be implemented through amendments to HESA, rather than through changes to the national VET regulator, ASQA, they only apply to providers offering VFH loans. To avoid meeting these increased standards, a VET provider simply has to stop offering this type of loan. The new requirements also add to the compliance burden for providers. The Department of Education and Training will be asking for certain types of information as a requirement under VFH, and ASQA officials will continue to separately engage with the provider about its obligations to them.

The tertiary education sector is diverse. A single VET provider could be offering some VFH-supported courses amongst many other VET qualifications. VFH students will have to pass minimum entry standards while non-VFH students will not, even if both are taking the same classes towards the same qualification. Further, a dual-sector university (one that offers higher education as well as VET) would report separately to ASQA, TESQA, the federal Department of Education and Training, and state and territory authorities, and may offer various types of student loans, all with different conditions.

These two recent Bills, including the Senate amendments, increase the fragmentation of the tertiary education sector. The lack of a single, navigable system makes it difficult for tertiary education providers to offer the most efficient service and for students to choose the most appropriate course.


Flagpost is a blog on current issues of interest to members of the Australian Parliament

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