‘The extension of the Australian government's
Higher Education Loans Programs (HELP) to
Vocational Education’
The role of loans in financing
vocational education and training
CEDEFOP Workshop, 4 October 2010, Thessaloniki
Gerald Burke
Centre for the Economics of Education and Training
gerald.burke@monash.edu
1
Australian context 1
• 22.5 million people in 2010
• Federal system – Australian and 8 States/territory governments
• Australian government provides
– funding support for tuition in public higher education
– loan schemes and student financial assistance, and
– part of public funding to vocational education delivered through States
• Fees relatively high in publicly supported higher education
• Fees low, so far, in public vocational education (5% of funds)
• Fees high in fully privately funded tertiary education, including
for international students
2
Australian context 2
• High participation rates in higher and vocational education
• Australia escaped the recession, supported by financial stimulus
• Australian Public expenditure growth now limited to 2% per year
• Need vocational education students to grow 3% per annum to lift
literacy, qualifications and labour force participation
• Public expenditure per hour of training in VET falling sharply, does
not get the priority of schools or higher education
• Need more funding per student for less advantaged
3
Fees and government funds $
Higher Education, Australian government supported place, full-time
(1)
full year 2010
Maximum fee
Approximate
Government funds
Total revenue to
provider
Science
4,200
15,200
19,400
Education
5,300
9,000
14,300
Humanities
5,300
4,900
10,200
Accounting, Law
8,900
1,800
10,700
Medicine
8,900
19,300
28,200
Examples
Vocational education,
Diploma and
Advanced Diploma
Victorian government supported place, full time full year 2010
Maximum fee*
Approximate
Government funds**
Total revenue to
provider
2,000
6,000
8,000
* Fees the same across all fields, projected to rise
** government funding is per hour of training, courses vary in total hours; funding per hour varied by field
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HECS-HELP
Higher education contribution scheme – higher education loan programme
1. Tuition fees reintroduced 1989 and income contingent loans
2. Debt to the Australian government for the specified tuition fees
3. Available for publicly supported higher education tuition
4. Discount on fees of 20% if choose to pay up-front
5. Repay to Tax Office when annual income reaches a threshold
6. Tax begins at 4% at $43,000 income, up to 8% when $80,000+
7. 10% bonus on voluntary extra repayments
8. Interest free except for that implied by discount but debt indexed
against consumer prices
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FEE-HELP for higher education
•
FEE-HELP for full-fee (no public support) courses from 2005
•
Similar in most respects to HECS-HELP
•
Extended to approved private providers
•
Maximum debt $106,000
•
Similar in most respects to HECS-HELP:
•
but no discount for up-front payments and
•
a loan fee of 20% is charged (quasi interest payment)
6
VET FEE-HELP from July 2009
•
Only available to Diploma+ courses in vocational education
•
Not available to certificate courses (which includes apprentices)
•
Available to full-fee students
•
Available to publicly supported students in one state (to date)
•
20% loan fee is charged for full-fee courses
•
20% loan fee not charged on publicly supported courses
•
Projected VET-HELP numbers 130,000 equivalent full-time 2013
•
Compared to 470,000 projected on HELP in higher education 2013
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VET students, public system only, Australia
2009 '000
Diploma or higher
200
12%
Certificate IV
219
13%
Certificate III
526
31%
Certificate II
296
17%
Certificate I
90
5%
377
22%
1,707
100%
Other students
Total
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Fees and government funds
(2)
Higher Education, Australian Government supported place, full-time 2010
Science
Education
Humanities
Accounting
Medicine
Maximum fee
4,249
5,310
5,310
8,859
8,859
Vocational education,
Diploma and
Advanced
Diploma
Government
funds
15,156
9,020
4,901
1,765
19,253
Total revenue to
provider
19,405
14,330
10,211
10,624
28,112
Years on
course
3.5
4.0
3.0
3.0
6.0
HELP debt on
completion
14,872
21,240
15,930
26,577
53,154
Victorian government supported place, full time 2010
Maximum fee*
Approximate
Government
funds**
Total revenue to
provider
Years on
course
HELP debt on
completion
2,000
6,000
8,000
1.5
3,000
* Fees the same across all fields
** government funding is per hour of training and courses vary in total hours; funding per hour varied by field of study
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Example of full-fee and/or supported course
in VET in another state
• Diploma of Business
• Career Opportunities Middle Level Manager, Administration Officer,
Team Leader, Supervisor, Business Trainee
• Entry Criteria School leavers with Year 12 etc or Non school-leavers are
on vocational experience, previous study and personal competencies
• Program Duration Full Time 12 months
• Program Award Diploma or Certificate IV
• Government Subsidized Fee Full Rate: $ 3,775
Government subsidized fees must be paid through existing payment
methods at the time of enrolment.
• Full Fee $15,260 VET FEE-HELP eligible
.
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Grants for student living costs
• HELP loans are for tuition fees only
• Australian government has grant schemes for living costs
• Grants for full-time students in senior secondary, higher and VET
• Subject to income and wealth tests
• About 30% of full-time students receive some assistance
• Not proposed to have loans for living costs
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Effects on Governments
•
•
•
Australian government covers fees and later collects repayments
Shifts some costs from State government to Australian government
Repayments --- rough estimate 50% to 75% of nominal fees
–
–
–
•
Threshold for repayment, some take a long time -- or never
VET graduates earn less than higher education graduates
Zero real interest on loan
Snapshot of data on HELP debt 2008-09
–
–
–
–
»
Loans to students in year
Repayments in year
Total accumulated debt
Expected never repaid
$ billion
2.8
1.4
17.8
4.3
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Effects on providers
‘Teething problems’ in first year causing admin problems:
–
–
–
–
FEE-HELP rules designed for higher education courses
Vocational courses have units of variable size
Choice of units can affect length of course
Diploma duration varies across fields of study
Loans are available for courses with approved providers including
government and private providers
13
VET diploma students and higher education
students
•
•
•
•
•
•
•
About 50% of VET diploma+ students aged up to 24
About 25% of older VET diploma students are full-time
Many younger ones progress to higher education
75% of university students full time and 88% on HECS-HELP
VET students on average older than higher education students
VET diploma students somewhat lower social background
Only rough data on VET so far but maybe 25% of all diploma
full and part-time students took up HELP this year in Victoria
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Effects on students +
1. Access to education not denied by inability to pay tuition fee
2. Repay only if income above 75% of average weekly earnings
3. No real interest charged on loan
4. Benefits of qualifications on average much greater than the fees
5. Some groups may not increase incomes very much, dont repay
6. Does not appear to have deterred students from higher education
but no evidence yet on VET
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Effects on students
-
1. So far not available to most VET students – only for Diplomas+
2. Vocational fees for diplomas already rising, will rise further
3. Exemptions from fees for low income diploma students abolished
4. VET caters for more disadvantaged students than higher education
5. VET students thought to be more risk averse but little evidence
6. Students who drop out have limited rewards, and a debt
7. Reduced disposable income in early working years
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References and links
Australian Treasury 2010, Intergenerational Report 2010
www.treasury.gov.au/igr/igr2010/
Chapman B, Rodrigues M and RyanC 2007, HECS for TAFE, Treasury Working Paper
2007–2 www.treasury.gov.au/documents/1252/PDF/TWP07-02.pdf
Lee W, Coelli M 2010, Analysis of private returns to VET NCVER
www.ncver.edu.au/publications/2221.html
Long M, and Shah C 2008, Private returns to vocational education and training
qualifications, NCVER www.ncver.edu.au/publications/2011.html
Going to Uni, Higher education for students in Australia
www.goingtouni.gov.au/Main/Quickfind/PayingForYourStudiesHELPLoans/HECSHEL
P.htm
Skills Australia 2010, Australian Workforce Futures
www.skillsaustralia.gov.au/PDFs_RTFs/WWF_strategy.pdf
VET FEE-HELP
www.deewr.gov.au/skills/programs/support/vetfeehelp/Pages/default.aspx
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