Australia

Less than half of vocational loans would be repaid, research shows

Less than half of all women in the workforce with vocational education and training certificates earn enough to repay their student loans.

Analysis by the Mitchell Institute at Victoria University has found that only 43 per cent of females earn above the Higher Education Loan Program (HELP) repayment income threshold of $46,620. It also found 26 per cent of part-time workers with VET qualifications reach the minimum repayment threshold in any given year.

Construction skills taught through vocational training are among those in high demand.

Construction skills taught through vocational training are among those in high demand.Credit:Simon Schluter

The release of the report, Skills for recovery: The vocational education system we need post-COVID-19, comes as the federal government considers Australian Productivity Commission proposals that include expanding student loans to all students in the VET sector. Loans are only offered for diploma level courses but would be extended to certificate level courses under the proposal.

"Small loans can help some VET students meet out-of-pocket costs, but any amounts approaching the size of loans in the university sector would probably do more harm than good," report author Sarah Pilcher said.

The researchers found that overall, just over half (53 per cent) of all VET certificate graduates excluding tradespeople earn above the repayment threshold. Non-tradespeople represent 65 per cent of VET certificate graduates.

The researchers, who based the calculations on census data, said this was significant because VET certificates are not covered by the loans scheme.

Minister for Employment and Skills Michaelia Cash said the government was considering the Productivity Commission’s recommendations.

Minister for Employment and Skills Michaelia Cash said the government was considering the Productivity Commission’s recommendations.Credit:Alex Ellinghausen

"This suggests extending the loans scheme to lower-level courses will mean many loans will not be paid back," the researchers said.

The Independent Tertiary Education Council Australia, the peak body representing independent providers, has also called for the suspension of a 20 per cent fee levied on those accessing student loans to be extended beyond September 2020.

"As the crisis continues it’s appropriate that the suspension be extended through to June 30, 2021," council chief executive Troy Williams said.

A spokeswoman for Employment and Skills minister Michaelia Cash said the government was considering the Productivity Commission’s recommendations and reviewing the VET Student Loan system. It would consider a range of views about how the program could be strengthened.

The federal government's student outcomes data suggests that in the year after graduation, certificate I, II and III graduates are likely to earn less than the minimum repayment threshold. Salary outcomes of full-time Certificate IV graduates exceed those of diploma or higher graduates.

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The Mitchell Institute education policy think tank has also warned that without reform, Australia will not be able to rely on the VET sector to provide the quality training needed to drive an economic recovery from the COVID-19 pandemic. It has made 10 recommendations, including a needs-based funding model similar to the systems used to fund schools and hospitals.

Ms Pilcher said that while the VET sector was designed to be flexible, this could result in huge variations in quality, which meant the public could not always be confident in how their money was being spent.

"We think it's time to be more specific about the type and amount of training that students receive in publicly funded courses," she said.

"The failed reforms of the past decade mean the VET sector can get a bad rap, but actually there is enormous capability and capacity if we get the settings right."

Ms Pilcher said more independent assessment methods and measures of proficiency were needed.

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