At least half a million young Australians won't get the chance to develop their skills and get a better job if the government pushes ahead with a planned vocational loans overhaul, the sector warns.
It's also cautioning there could be major job losses if the number of courses eligible for taxpayer-funded loans is slashed as planned.
Private vocational trainers agree reform is needed but will tell senators on Tuesday the proposal before parliament has flaws.
In particular, the Australian Council for Private Education and Training says there was inadequate consultation around the list of courses that will attract loans, which is being cut from 825 to about 350.
"This wholesale removal of courses leaves few, if any, options for many students to gain support to obtain qualifications and pursue careers in fields of education that are likely to provide the 'future of work' as Australia's services sector economy develops," the council says in its submission to a parliamentary inquiry into the changes.
A ban on subcontracting course delivery without government approval "is an extreme invasion into the management practices of business and will result in overwhelming red tape".
Another key feature is capping loans at $5000, $10,000 or $15,000 based on what the government believes delivery costs should be.
Private providers say this is a "simplistic tool" that will lead to trainers either scrapping expensive courses or cutting quality.
TAFE directors also worry the loan caps will lead to an overall drop in course quality.
"The proposed registration criteria for the VET Student Loans Scheme will not necessarily exclude bad providers, who will merely adjust their quality down to the meet the funds on offer," TAFE Directors Australia says in its submission.
They want TAFEs exempted from the loan caps and restrictions on eligible courses, arguing their institutions enjoy the same high level of community trust as universities but are given much less autonomy.
"TAFE students have not been the cause of the VET FEE-HELP (loan scheme) expenditure blowout nor is there a likelihood of such occurring in the future," the directors say.
The committee inquiry in Melbourne will also hear from the consumer watchdog, the National Tertiary Education Union, the vocational sector's regulator and the federal education department.
