The federal government is overhauling vocational student loans in a move to stop dodgy providers rorting the system and save taxpayers $7 billion.
Education Minister Simon Birmingham says the new loans program will "hit the reset button" and return integrity to the sector.
"The waste and rorting and damage to vocational education simply cannot continue," he said.
"VET student loans will only support legitimate students to undertake worthwhile and value for money courses at quality training providers."
Under the new system, only courses that meet industry needs and are highly likely to lead to students getting a job will be eligible for government-funded loans.
Courses will be sorted into bands with fees covered by the government capped at $5000, $10,000 or $15,000 depending on delivery costs.
Trainers will be banned from using recruitment brokers or cold-calling potential students.
Public VET providers, including TAFEs, will automatically be able to offer the revamped commonwealth loans but all private providers will have to reapply to be eligible.
Private providers have largely been behind the massive increase in VET enrolments, with government loans blowing out from $325 million in 2012 to $2.9 billion in 2015
The government's plans also include:
- Requirements for students to log in to an online student loans portal to ensure they are active and legitimate;
- a much higher bar for providers that want to offer government loans, including examining their relationships with industry, student completion rates, employment outcomes, and track record as education institutions;
- stronger compliance conditions including paying providers in arrears and the ability to cap provider loan amounts and student numbers; and
- powers to stop poor performing providers from using the loans scheme and to cancel their payments.
Senator Birmingham wants the new system of VET student loans in place by the start of 2017.
That means he'll have to steer legislation through parliament quickly, with just five sitting weeks left before the end of the year.
