Australia’s vocational education and training (VET) sector delivers workplace specific skills and knowledge across a wide range of careers and industries, and is crucial to Australia’s social and economic prosperity. VET contributes to developing our national workforce, provides pathways to employment and addresses barriers to workforce participation. The VET FEE-HELP scheme commenced in 2009, and provides income contingent loans to students studying higher level VET qualifications. Its original intent was to remove financial barriers to study and to encourage students to pursue pathways to further or higher skilled qualifications in the higher education sector.

In 2012 the then Australian Government removed the requirement for a link to higher education in an effort to open up state and territory training markets. Whilst this has led to benefits including competition and agility to respond to changing consumer and economic needs, these changes also created serious weaknesses in the scheme and exposed it to abuse. In particular, the application of a system designed for universities to VET, without taking into account the differences in the sectors and low barriers to entry, is the key cause of the future problems with VET FEE-HELP.

In addition, the legislation provided for only limited compliance powers for the department, as the relevant consideration for determining payments to providers was whether or not the provider’s students had an entitlement to VET FEE-HELP. The extraordinary growth of the scheme since 2012 led to urgent action, with sixteen reforms introduced by the Government in 2016 to address unethical behaviour and abuse of student entitlements. Despite progress made as a result of these reforms it has become clear that the scheme is no longer sustainable in its current form. The Commonwealth Government is committed to introducing a new scheme in 2017 which is robust, sustainable and high quality.

This discussion paper details a range of issues with the current VET FEE-HELP scheme and outlines options to address these as part of the 2017 redesign. It has been informed by consultation forums with VET FEE-HELP providers in early April 2016. The Commonwealth is keen to engage with all stakeholders including providers, students, industry, employers and other interested parties through this paper and welcomes all feedback on the future design and operation of the VET FEE-HELP scheme.