HECS architect calls for loan scheme to cover vocational training

“I have always been committed to reducing financial barriers to allow more students access to in-demand qualifications needed for the jobs of tomorrow,” Dr Lee said.

“By improving access to vocational education we are ensuring that school leavers, job seekers and career changers have equal access to training and that businesses are able to get the skilled workers where and when they need.”

NSW Minister for Skills and Tertiary Education Dr Geoff Lee (left) and TAFE NSW managing director Steffen Faurby.

NSW Minister for Skills and Tertiary Education Dr Geoff Lee (left) and TAFE NSW managing director Steffen Faurby.Credit:Kate Geraghty

The federal government has lowered the income threshold for repayment of student loans for 2020-21 to $46,620 per year from $52,000 the previous year.

Associate Professor Tim Higgins, who specialises in applied economics and is an actuary and statistician at the Australian National University, has done economic modelling to show a lower income and lower repayment rate would result in more people repaying loans.

Professor Chapman said that while lower concessional prices for TAFE courses were “well intentioned”, they reflected a misunderstanding of the economics of tertiary education financing.

“Zero or very low prices for everybody means you end up starving the TAFE system,” he said.

“The critical point is that any level of up-front charge has the strong potential to exclude some poor prospective students, and the most equitable way to comprehensively mitigate this barrier is by making all tertiary education free at the point of entry, paid for eventually by former students through an income contingent loan.”

A spokesman for Minister for Skills Michaelia Cash said the federal government was exploring options to expand and improve the VET Student Loan program with states and territories.

“Any expansion must be done in a way that supports high-quality training, delivered to the students who need it,” the spokesman said.

“Any option would need to ensure students are able to access quality courses which would meaningfully improve their employment prospects, while ensuring students have the ability to repay loans.”

The government is considering the Productivity Commission’s review in the context of negotiations with state and territory governments on a new National Skills Agreement.

Labor’s spokesman on Employment and Skills Richard Marles said any decision to extend loans to the vocational education and training sector should not burden trainees and apprentices with unnecessary debt.

“Least of all, any plan should not be a disincentive for more Australians to upskill and train themselves in the post COVID recovery – we need more workers in jobs,” he said.

Education policy researcher Peter Hurley from the Mitchell Institute at Victoria University said while there may be merit in providing loans for students with high up-front fees, students in the VET sector often ended up in jobs that did not pay as much as jobs for university graduates, “so the idea of an income-contingent loan is problematic because you might just be consigning them to debt that they may not be able to pay back”.

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