The federal government will take over consumer guarantee arrangements for students of failed vocational colleges, with the current insurers at risk of “overextending themselves”.
Education Minister Simon Birmingham said the government was making a “pre-emptive strike” to ensure students were protected next year.
The move will see the government assume temporary control of tuition assurance arrangements for domestic vocational education and training students bankrolled by the VET Student Loans, FEE-HELP and grandfathered VET FEE-HELP schemes.
Senator Birmingham said VET FEE-HELP had been rorted and “these actions are one of the final steps in cleaning up this mess”.
The tuition assurance schemes, run by the peak TAFE and private college bodies, help students when colleges stop offering courses or close down altogether. The schemes enable the students to switch to alternative providers without charge, or — if that proves impossible — refund fees paid for units they have not completed.
The catastrophic crashes of college chains like Careers Australia, which left a reported 15,000 students stranded with unfinished courses when it went into receivership, have put these schemes under massive stress.
The schemes’ providers, TAFE Directors Australia and the Australian Council for Private Education and Training, remain liable for tuition assurance obligations incurred up until the end of the year.
Senator Birmingham said the providers had taken “risks with some of the training organisations they backed and given the extent of the existing obligations, we could no longer be certain (they) would be able to protect future students”.
The new arrangements apply next year. “The Department of Education and Training will develop sustainable tuition assurance models for implementation beyond 2018,” the department’s deputy secretary Subho Banerjee told colleges in a letter.
He said the change meant colleges would be exempted from tuition assurance requirements next year so long as they met certain unstated conditions.