21 October 2015
by Tim Dodd

College gets $46m in government money for 5pc pass rate

A private college group which received $46 million last year from the federal government's student loan scheme, but whose students completed less than five units of study, is under investigation by the regulator, the Australian Skills Quality Authority (ASQA).

Data on the VET FEE-HELP loan scheme, released on Tuesday, shows that Cornerstone Investment Australia which operates two colleges, the Australian Institute of Commerce and Language and the Empower Institute, had enrolled 4262 students in 2014 who were assisted by VET FEE-HELP loans. But only 51 units of study were undertaken by students with a pass rate of 5 per cent.

In a report on VET FEE-HELP audits also released on Tuesday, ASQA said it had given Cornerstone "substantial regulatory scrutiny" which was ongoing.

ASQA said it had cancelled the registration of another education provider, Unique International College, which received $77 million from VET FEE-HELP in 2014 but only 5.6 per cent of units taken by students were passed.

Another eight colleges, although found to be compliant, had conditions placed on their registration, including Evocca College, the largest recipient of government VET FEE-HELP money, whose parent group ACTE received $250 million under the loan scheme in 2014.

Rod Camm, chief executive of the Australian Council of Private Education and Training (which represents private colleges) called on the government to intervene and, if necessary, act swiftly to cut VET FEE HELP funding to colleges which were not producing acceptable results.

"Completion rates this low for the level of investment [from the government] is not acceptable," he said.

VET FEE-HELP cost blows out
The VET FEE-HELP scheme is similar to HECS in that the government pays the education provider up front for the cost of each unit the student enrols in, and the student repays the money through the tax system once their annual income reaches about $54,000.

The cost of the VET FEE-HELP scheme soared last year with the government paying out $1.8 billion to colleges and TAFEs for 203,000 students, compared to $700 million in 2013 for 100,000 students.

This year the federal government introduced new rules to clamp down on abuse of the scheme after some colleges were found to be using high-pressure sales techniques and inducements, such as free iPads, to entice students to sign up for unsuitable courses, saddling them with a loan debt.

ASQA said that four other education providers, along with Cornerstone, were still under scrutiny over their use of VET FEE-HELP. These are Victorian TAFE college Holmesglen Institute, the large private provider Study Group which runs Martin College, the College of Creative Design and Arts, and the Australian Institute of Professional Education. Study Group received $102 million and the Australian Institute of Professional Education received $110 million from VET FEE-HELP in 2014.

ASQA's audit report dealt with only 21 education providers which were selected because of complaints received. Chief commissioner Chris Robinson said the authority would "continue to closely monitor and target" colleges which used VET FEE-HELP and give them more scrutiny if complaints, or industry intelligence, gave cause for concern.

Other colleges which receive large amounts of money from the VET FEE-HELP scheme in 2014 include Career Australia Education Institute ($149 million), Think Colleges ($67 million) and Navitas Professional Institute ($22 million).