December 17, 2017

Increase funding to TAFE, not more student loans

By The Stop TAFE Cuts team

As the unfolding funding catastrophe in TAFE and vocational education was revealed again this week, it has elicited calls from those who have been at the forefront of the introduction of Income Contingent Loans into the sector to further expand them to lower level VET qualifications. The TAFE system has been decimated over the past six years by underfunding, by the policy decisions of governments to open access to public funds to for-profit providers, and by the activities of for-profit providers in exploiting the disastrous VET FEE-HELP income contingent loans scheme.

As the magnitude of this disaster unfolds, it makes no sense that those at the forefront of the creation of a VET market espouse a further shift of funding responsibility for the sector onto individual students. Trust in the sector has been destroyed by the activities of for-profit providers, underfunding has damaged TAFE institutions, and a failed VET FEE-HELP experiment has left many young people with a life-long legacy of debt for qualifications which in many cases were never delivered, and which are effectively useless to them. No wonder enrolments in TAFE have crashed – it is now cheaper for students to enrol in an undergraduate degree at university in terms of upfront costs, than it is for them to enrol in a certificate course at TAFE.

The income contingent loan scheme for vocational education students (VET Student Loans) introduced after the collapse of the VET FEE-HELP scheme limits loans to courses included on an approved course list set by the Federal Government and includes loan “caps” of $5000, $10,000 or $15,000 depending on the course. Unlike income contingent loans in the higher Education sector, VET Student Loans are based on students paying the full cost of qualifications, but only being able to borrow through the loans scheme under the cap ($5000, $10,000 or $15,000). This means that if the provider charges more than the cap, the student is required to meet the additional cost themselves. VET Student Loans cover selected Diplomas, Advanced Diplomas, Graduate Certificates, and Graduate Diplomas at approved providers.

Students who want to study at certificate levels in vocational education do not have access to VET Student Loans and are faced with upfront fees which, if the course is unsubsidised by government might be required to cover the full upfront cost of the qualification. This can be prohibitively expensive. This is the argument that is used justify extending income contingent loans to cover all of vocational education.

Income contingent loans are one of the key levers of the market reform experiment. Market reform has manifestly failed in the Australian TAFE system. The problems of market reform cannot be fixed with more market reforms as the history of the last few years has shown. Expanding access to income contingent loans to certificate qualifications at TAFE and in the rest of the vocational education sector will not work, and will further damage the sector.

This is why:

1. Income Contingent Loans shifts the cost from governments to students

The extension of Income Contingent Loans to all vocational education courses would condemn it to being entirely a “user pays” system. As Income Contingent Loans were made available, and government funding declined, the cost of courses rose – particularly at the Diploma level. The same thing will happen if VET Student Loans are extended to lower level qualifications.

The decline of government funding overall has already increased the cost of many qualifications below the Diploma level. Before the introduction of VET FEE-HELP in 2012, TAFE fees remained comparably low in contrast with the Higher Education sector. Starving the sector of government funds has forced TAFE to raise the course fees students are required to pay. Increased government investment would allow TAFE to provide courses at no cost to students, or with a modest administration fee to those who can afford it.

Government investment in education must in the first instance be about public good, and about the benefits to society as a whole of having an educated population. These benefits flow through to the economy in a very tangible way. Income contingent loans are a feature of neo-liberal reform processes, where individuals, many of them the most vulnerable in society, are forced to become market citizens responsible for their own existence in an unfair and punitive economy.

2. Income Contingent Loans do not guarantee participation rates

In 2015, 44.5% of students who enrolled in vocational education courses were from low socioeconomic backgrounds, while in the same year only 17.7% of first year university students were. Income contingent loans are promoted as increasing participation in education, but there is no real evidence of this. When VET FEE-HELP was first introduced in Victoria in mid-2009 – for the first 18 months of the scheme only 28% of eligible Victoria students used the scheme. The uptake of the loans appear to have skyrocketed once the marketing machine of private for-profit providers started to work the system.

On the other hand, in 1973 the Whitlam Government abolished student fees in TAFE. This resulted in enrolments growing from 400,700 in 1973 to 671,013 in 1975 – an increase of 59%.

3. Australian governments have increased student contributions through income contingent loans rather than increased government investment

It is worth noting again that the current income contingent loan scheme available for vocational education students is very different to the HECS scheme in Higher Education. With VET FEE-HELP, and now VET Student Loans, students are required to borrow the whole cost of the course; whereas the government subsidises about 60% of the cost of the qualification under the HECS-HELP scheme in the Higher Education sector.

So vocational education students pay proportionally more for their qualifications – the full cost of delivery –whilst receiving no subsidy from the government.

If we look at the evolution of HECS charges since their introduction into Higher Education in 1989, they increased between 33% and 122% between 1996 and 2007, depending on the Band. While the government continues to pay a proportion, the cost for students for a degree has steadily increased.

Governments will always find it easier to increase resources to education by increasing student contributions, rather than providing more funding to institutions.

Income contingent loan enthusiasts promote HECS and VET Student Loans as the way to expand access to education and increase funding to the sector.

It’s time to start looking for more sensible solutions.

In the report from the Kangan Review of 1974, the Committee on Technical and Further Education concluded that:

”There is no logical reason why the community should not subsidise the vocational education of persons wishing to study for skilled or middle level occupations at a technical college…”

What if, in the spirit of the Kangan Review, governments funded TAFE colleges, instead of shifting the costs of education onto students?

Adequately funded TAFE colleges would be able to provide a wide range of qualifications free, or at minimum cost to students as they have done in the past.

This would allow participation in vocational education from all sections of society.

Public TAFE colleges must provide a wide range of courses, so that students can enter tertiary education at a point where they can engage passionately in what interests them, rather than being channelled into poorly defined, and narrowly conceived areas on largely discredited skills shortage lists.

Students need to have access to a broad general education, as well as industry relevant vocational skills and knowledge.

As 2017 concludes, TAFE remains the worst funded education sector, and it is facing an existential crisis. Tinkering on the edges of the training market – trying to fix the problems wrought by market reforms with more market reforms – will not work. Extending income contingent loans in an attempt to increase funding to the sector will not work.

A well-resourced TAFE system is the best solution to increased participation in the economy and in society. It offers the potential of meaningful partnerships with industry to meet the demands of the economy into the future, it fundamentally addresses the crisis of quality in the sector and it asserts the importance of education to society.

Shifting the burden of cost onto students through expanding student loans isn’t the answer.

Only guaranteed funding for TAFE has any chance of solving the problems in vocational education.