14 June 2016

How can TAFE diversify its income and stay afloat in a changing funding environment?

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As the TAFE system continues to compete with private vocational education and training colleges, the need to enhance existing financial models, and secure additional funding is bringing innovation and growth to the sector. Despite this class sizes continue to rise as back office resources continue to be reduced.


Changes made in 2010 opened up VET FEE-HELP to the Vocational Education and Training sector. The change was designed to allow students who otherwise were unable to afford the fees of a private college the opportunity to study, gaining work based skills.

In 2012, then NSW Premier Barry O’Farrell, cut $1.7 billion in government funding to NSW TAFE’s resulting in an estimated 800 job losses, increasing class sizes which resulted in a reduction in the number of students graduating.

As TAFE began to compete with the private education sector for students – and therefore the funding they needed to stay in business – profit seemed to become the determining factor, rather than education.

TAFE has continued to supply accredited training, continuing to produce the majority of graduates in trade qualifications, doing so more on the ‘smell of an oily rag’, making do with less despite having to do more.

Analysis by the National Centre for Vocational Education Research has shown the public TAFE system remains overwhelmingly the dominant provider of trade based qualifications. The figures remain unchanged from 2010, with TAFE accounting for 80 per cent of graduates in the plumbing trade, while private colleges account for only 6 per cent.

An article in the Australian in April 2o16, also stated the research showed TAFEs also produced the majority of course completions across all qualifications.

Despite these statistics 75 per cent of the $3.1 billion in VET FEE-HELP funding made between 2010 and 2014 went directly to private providers.

While there are many honourable and honest private colleges, the private education system has been rocked by almost daily announcements of investigations into dodgy colleges.

During the 2016 election campaign, Opposition Treasury spokesman Chris Bowen announced a proposed $8,000 annual cap on VET FEE-HELP loans. Higher Education Spokesperson Kim Carr said the proposal would provide “… protection for students and reduce the call on the budget…”.

Currently the scheme allows students to access $100,000 in study loans, with no annual cap and no call to repay the loans until the student is earning $54,000 per year. It is this opportunity that has seen course fees in the private education sector sky rocket.

“The average cost to providers is less than $4000,” Mr Carr said in an interview with The Australian on the 10th of June 2016. “There would still be room for companies to continue making a profit but nothing like the $20,000 course fees we’re seeing now.”

Recent research provided by the Labor party shows students attending a private college course in Salon Management are being charged more than $32,000 while the same qualification provided by NSW TAFE, is at a cost of $6,990.

In today’s world everything is about perception and the current perception of the Vocational Education and Training sector is one that brings up images of the Wild, Wild, West. 

Mavericks, card sharks and cowboy operators have taken the opportunities available and turned the industry into O.K Corral, muddying the reputations of not only the legitimate operators but the industry as a whole.

From sky rocketing course fees to phantom students rogue operators appear to have infiltrated the VET sector.

In attempt to overhaul the VET FEE-HELP Scheme, the Turnbull Government froze the loans available to private colleges to the same amount as claimed in 2015. What this meant was if a college had billed the government for $50 million in 2015, it would be unable to claim more than $50 million in 2016.

As the crackdown on private colleges claiming billions from the Federal Government has been praised by the TAFE industry, the reality is there are now tens of thousands of students, mortgaged to the back-teeth who will never graduate from their courses.

Sales tricks such as; study now and pay later, or free iPad’s on signing up to the course are rife, with the Australian Competition and Consumer Commission taking court action against Sydney based college Unique International. After an audit by the ACCC found Unique International had only a 2.4 per cent graduation rate (despite billing the VET FEE-HELP for more than $57 million in loans paid as upfront fees to the college), the ACCC took the college to the Federal Court claiming the college engaged in unconscionable conduct.

The case, currently before the Federal Court has heard allegations that Unique International relied heavily on students in very remote areas, undertaking a deliberately targeted approach to secure them with various incentives.

In its Statement of Claim, the ACCC alleges Unique International deliberately targeted illiterate and disabled people living in remote Aboriginal communities, with staff alleged to have traveled the country with boxes of laptops and iPads to give to anyone who signed up to an online course costing between $22,000 and $25,000.

While this is the first time the ACCC has taken a private college to court, it’s not the first private college to come under fire including Careers Australia Education Institute which in an agreement with the ACCC has seen the training provider forgo tens of millions of dollars in funding.

As both sides of the political divide attempt to come up with a resolution, the reality for TAFE is a loss of revenue and resources that need to be made up from somewhere. TAFE, no longer ensured a secure and steady stream of government funding, are being forced to innovate to deliver.

Entering new markets and developing strategic partnerships – both nationally and internationally – is one opportunity that TAFE needs to explore if they are to remain open for business in the coming years. Both TAFE and Private VET providers are embracing emerging markets and capitalising on their abilities to apply entrepreneurial know-how in order to align existing organisational strengths to focus on my specialised skill sets.

By entering into strategic partnerships, education providers in the VET landscape are able to diversify their revenue streams, protecting themselves against further government funding cuts and enhancing their abilities to deliver top notch education to their students without being the victims of the winds of change. 

Mike Cullen has recently returned to Akolade after a period as the conference producer for one of Australia's leading economic think tanks. Mike began working in the conference industry in 2007 after looking for a career change from the high pressured world of inbound customer service. Mike has worked for some of the most well-known conference and media companies in the B2B space and in his spare time is working on his first novel in a planned Epic Fantasy trilogy.

Mike’s most recently published story, Seeds of Eden, is featured in the Sproutlings Anthology released in March 2016.

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