Labor Senators cautiously welcome the Education Legislation Amendment (Tuition Protection and Other Measures) Bill 2019, VET Student Loans (VSL Tuition Protection Levy) Bill 2019 and the Higher Education Support (HELP Tuition Protection Levy) Bill 2019.
Labor Senators support the practical effect of introducing protections for students with VSL/HELP loans and simpler processes for decision-making, student placement, and VSL/HELP loan re-crediting. Students should be protected and assisted in instances of provider or course closure.
Submitters to the inquiry were broadly supportive of the legislation, but raised two key concerns that are shared by Labor Senators. First, the proposed arrangement places an unreasonable financial burden on TAFEs and TAFE students who use student loans given the secure nature of public providers backed by state governments, while also effectively requiring TAFEs to provide for students displaced from failed private providers. Second, the proposed tuition protection arrangement will not cover full-fee paying domestic students, creating a complex situation where different students will have different rights and protections.
Concerns relating to TAFEs
TAFE institutions have a history of providing high quality technical, further and general education and should be the backbone of Australia’s skills and training sector. The largely unrivalled consistency and quality of TAFE in the vocational education training sector should be protected and supported.
Labor Senators share the concerns of TAFE Directors Australia (TDA) that students attending TAFEs, like public universities, are effectively guaranteed by their relevant state government and do not present a risk to student fees that justify TAFEs financial inclusion in the scheme. There is a very real risk that students accessing student loans in order to attend TAFE will end up bearing a portion of the cost of securing tuition protection for students who have accessed a student loan to attend a private provider. Mr Jackson from TDA states:
It is partly setting up a scheme that only covers 14 000 students at a significant cost to the public sector, when in fact the public sector is already insuring its students by being state owned. So the question in some ways is around the economics of just having a scheme for 14 000 VET student loan students, when probably the greater risk is for those full-fee-paying students who are outside it, except full-fee-paying with TAFEs, who are actually guaranteed by their state government anyway.
Further demonstrating the case that TAFE students have no significant risk of losing coverage of their loans, the Department of Employment, Skills, Small and Family Business confirmed that:
The Department has managed interim Tuition Assurance arrangements from 1 January 2018. During this period no TAFE students have sought course assurance or been eligible for a re-credit of any part of their loan.
On the basis that TAFEs pose no risk to student loans, Labor Senators are of the view that it would be appropriate to carve out TAFE from the proposed financial arrangements. As highlighted in evidence to the committee, TAFEs will be relied on in the arrangements under this legislation to enable students to complete their studies in the event of private provider or course closure. TAFEs should be exempt from administration fees and financial levies imposed by the scheme, noting that this should not affect their obligation to enrol students who fall back on the public provider to finish their course or qualification. This legislation essentially relies on TAFE as a public provider of last resort in the event of a closure, while insisting that it insure its own students. As state government public institutions this is a contradictory and unreasonable obligation.
A majority of submitters raised concern that the proposed tuition protection arrangements would not extend to full-fee paying students.
Labor Senators are supportive of the Commonwealth mitigating its own potential financial risk in the FEE-HELP loan book, with a tuition protection scheme protecting students when a provider ceases to operate or has their course cancelled for other reasons.
However, Labor is concerned that the proposed tuition protection arrangements leave full-fee paying students vulnerable.
Labor Senators note that due to the 20 per cent levy on the value of FEE-HELP loans, there is a considerable incentive for students to pay upfront.
Labor Senators note that private providers do already bear a legal obligation to provide tuition protection for fee paying students, and that students may seek recourse via the Australian Competition and Consumer Commission (ACCC). However, Labor Senators are concerned that the scheme entrenches complex arrangements where different students have different rights and protections.
Labor Senators note that the Independent Tertiary Education Council Australia (ITECA) insurance scheme is being disbanded and that the remaining guarantees for these students will only consist of a bank guarantee or a requirement that an institution not charge more than $1500 up front.
The legislation, while providing protection for FEE-HELP paying students within private providers for the first time, leaves behind upfront fee paying students and places the business viability of some of these private institutions at risk, with flow on impacts for students.
ITECA has highlighted in evidence to the committee that savvy students will be likely to seek at least a small portion of a FEE-HELP loan in order to avail themselves of the protections under this legislation.
Labor Senators are concerned by the suggestion of the Department of Education that students who have paid their tuition fees upfront should seek recourse via the ACCC. As highlighted by Mr Troy Williams of ITECA, students are not likely to receive compensation for fees paid to a provider because the provider is likely to be in liquidation and no longer operating.
In answer to your question on the ACCC, we found them to be quite helpful. But there's a structural issue. If the department's advice is—and it has been in past—for a student from a college that is no longer operating to go the ACCC, the ACCC's ability to support that student is compromised simply because the company is usually in administration. The options available to the ACCC are very limited in those circumstances.
But, as I said, in those circumstances, its ability to support the student, who we feel for—we deal with these students on a daily basis—is compromised because the company is no longer operating or is in administration or liquidation.
The proposed legislation will lead to a more complex system for students to navigate and could place some students at a disadvantage. For providers, the legislation will go some way to entrenching different protection arrangements for different cohorts of students, which by its nature will create a more complicated regulatory environment in which providers will operate.
Labor Senators are supportive of the legislation, but remain concerned that the primary motivation for this legislation is to protect government loans, not students, and certainly not the TAFE sector.
Labor Senators call on the government to exempt TAFEs from making financial contributions to the proposed arrangements on the basis that TAFEs are effectively guaranteed by their relevant state government.
Labor also calls on the government to monitor tuition protection arrangements for full-fee paying students, particularly as ITECA withdraws their tuition assurance product from the market, to ensure that all students have access to adequate tuition protection and that students are not disadvantaged because they paid their fees upfront.
Senator Louise Pratt
Senator Deborah O'Neill