VET FEE-HELP scheme: Can it be fixed?
Senator the Hon Scott Ryan, Minister for Vocational Education and Skills has commenced a series of national consultations to discuss recommended reform of the VET FEE-HELP scheme to be established in 2017. In a media release published 4 April, Senator Ryan stated:
“Our reforms will centre on ensuring students acquire the skills they need to get jobs, that taxpayers’ money is well spent, and that shonky practices are eliminated.”
“The VET sector works for the overwhelming majority who access it. However, it is clear that the VET FEE-HELP scheme requires substantial change as its design was flawed and it failed to include appropriate protections for students and taxpayers, and had insufficient measures to guarantee quality training.”
The HELP scheme repayments threshold has been a hot news topic in recent weeks. Last month, the Grattan Institute’s Andrew Norton released his report, HELP for the future: Fairer repayment of student debt. In it, he suggests that the annual income threshold for repaying HELP scheme debts should be reduced from the current rate of $54,126 to $42,000.
According to his research, Norton says that HELP scheme take-up has increased steadily since its establishment in 1989 with a marked increase since the higher education boom and introduction of VET into the scheme, and that roughly one-quarter of the current total outstanding HELP scheme debt will never be repaid.
From a VET standpoint, Norton claims that the current issue with HELP scheme debt repayments is also due in part to the increase in VET enrolments that will never be paid out because of questionable recruitment practices by some providers and subsequent drop-outs.
CAN AUSTRALIANS AFFORD A SHIFT?
There is no denying that finding the balance between providing all Australians with fair access to education and maintaining our society’s wellbeing is a complicated and highly emotive issue.
Amongst the many justifications presented by Norton as to why this measure is necessary is that more graduates are undertaking part-time work and, therefore, their income falls below the threshold. He claims that this is due in part to more female graduates leaving full-time positions to focus on family commitments. However, he asserts that half of these women live with a partner and that 70% of those households have a combined annual income that exceeds the current threshold.
According to data collected by McCrindle Research, while the average household incomes were approximately 8.5 times higher in 2015 than they were in 1975, the actual cost of living has increased dramatically. For example, the average purchase price of a home in Melbourne is over 31 times higher than the average in 1975 while staple items such as milk, bread and petrol are between 3 and 10 times more expensive. Norton’s report admits that women, lower income earners, people undertaking part-time work and recent graduates will be most affected by the change as they will have less disposable income to work with each pay.
Given this information, can decreasing the HELP scheme repayment threshold continue to ensure the physical and emotional wellbeing of these groups whilst providing Australians with fair access to higher education?
“$42,000 is pretty low, isn’t it?” says Janette, a mother from Geelong whose children are currently going through the VET system. “If you wanted to get a diploma in a field, you’re going to be a young adult when you’re qualified. Most people would then be looking at leaving home and trying to set up their life. Once you’re earning around $54,000, you’re getting a little more in your pay pack every week so you can budget for it. But at $42,000, that’s a lot of money to come up with to pay that debt back.”
Karen, a counsellor from the Central Coast disagrees. “The HELP fee threshold should be reduced to $42,000.” she says. “We have a number of people not repaying their HELP loans due to working part-time or taking time off work. I have colleagues never intending to repay their loan by keeping earnings under the threshold. This is negating assistance for future programs.”
“Education allows us to earn better income and improve quality of life. We all need to pay for the service we receive.”
IS THE SCHEME APPROPRIATE FOR VET?
According to Study in Australia, VET-level qualifications cost between $4,000 and $22,000 on average whilst bachelor degrees cost between $15,000 and $33,000 per annum. Furthermore, Norton’s report showed that those who have completed VET-level qualifications earn less on average than their bachelor, master and PhD-qualified counterparts.
Chris*, a metal fabrication professional from country NSW believes that the HELP scheme may not be appropriate for some trades at all. “My son just got an apprenticeship, and when he did his sign-up he was offered this option,” he says. “I’m a bit against it, especially for an apprentice. In the metal fabrication industry in NSW, a good fabricator would be lucky to make $53,000.”
Janette disagrees. “It’s definitely a necessary service,” she says. “We were lucky enough to help my daughter financially, but if you don’t have family and friends who are able to help people get to that next level, you are going to miss out on so many people that have loads of potential because they can’t afford it. That would be a pity.”
IS NOW REALLY THE TIME FOR CHANGE?
The Australian education system is experiencing significant change. Within the VET sector alone, new rules around marketing, admission and refunds for students who leave their courses have only recently gone into effect. We have already witnessed positive steps being taken in the way young people are recruited into the VET system, and more changes are forthcoming.
“I think we need to be looking more at how training providers are being paid,” says Michael, a carpentry teacher from regional Victoria. “Some unscrupulous training providers are recruiting kids into courses they don’t understand and will never finish, yet they’re still getting paid for them. I think there needs to be a percentage system in place where the training provider receives a certain percentage at the start and the rest is held back until the student finishes the course.”
“The government does need to recoup this money somehow, but if these students don’t enter the workforce and become tax-payers themselves, then the government won’t get paid in any way.”
DISCLAIMER: The views and opinions expressed by those providing comments in this article are theirs alone and do not necessarily reflect the official policy or position of WorldSkills Australia and its associated entities.
* Name has been changed for privacy reasons.