House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Employment, Skills, Small and Family Business, Senator the Hon Michaelia Cash)

OUTLINE

The principal purpose of the Education Legislation Amendment (Tuition Protection and Other Measures) Bill 2019 ( Bill ) is to amend the VET Student Loans Act 2016 ( VSL Act ) and the Higher Education Support Act 2003 ( HESA ) to implement a new tuition protection model for students accessing VET Student Loans, FEE-HELP or HECS-HELP at a private education provider or TAFE, to provide greater tuition protection to students.

Tuition protection aims to ensure students are protected and supported in the event that their course provider defaults - that is, where the student has not withdrawn from the course and either:

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the provider fails to start to provide a course or a part of a course to the student on the day on which the course or part was scheduled to start; or

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the provider ceases to provide a course or a part of a course to the student on a day after the course or part starts but before it is completed.

The proposed tuition protection arrangements are modelled on the successful Tuition Protection Scheme ( TPS ) arrangements for international students under the Education Services for Overseas Students Act 2000 ( ESOS Act). For many years now, Australia has been a world leader in supporting international students studying in Australia if their provider closes. The expansion of the successful TPS model to the VET Student Loans program and students in receipt of FEE-HELP and HECS-HELP at private education providers and TAFEs is part of the Government's ongoing commitment to safeguarding the integrity and reputation of its domestic income contingent loan programs. The Bill provides for the new tuition protection arrangements to commence on 1 January 2020. Consistent with previous tuition assurance arrangements, the proposed arrangements do not apply to Table A providers (i.e. public universities) and students enrolled with Table A providers are not included in the scope of the tuition protection model, since those providers are assessed to have a low risk of default. This does not prevent Table A providers from enrolling displaced students as replacement providers.

The Bill provides the new VET Student Loans, FEE-HELP and HECS-HELP tuition protection arrangements will:

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each be administered by a Tuition Protection Director with functions specific to each sector, but for the VET Student Loans Tuition Protection and HELP Tuition Protection Directors to be the same person as the independent TPS Director appointed under the ESOS Act;

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each be supported by separate Tuition Protection Fund Advisory Board, but with the same members as those appointed to the TPS Advisory Board. The relevant board will provide advice and make recommendations to the relevant Tuition Protection Director. The members of the Boards are a combination of sector and government representatives to ensure there is a diverse range of views factored into decision making;

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require non-exempt providers to contribute annual levies, commensurate with their size and risk, under the accompanying VET Student Loans (VSL Tuition Protection Levy) Bill 2019 and Higher Education Support (HELP Tuition Protection Levy) Bill 2019. The levy system ensures the new arrangements are sustainable and can respond to trends in each sector;

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establish two new separate special accounts: the VET Student Loans Tuition Protection Fund and the HELP Tuition Protection Fund. The special accounts will be used to make payments in relation to the arrangements to support displaced students of that sector; and for the remuneration and allowances of the Tuition Protection Director and Board;

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provide assistance to students who may complete their studies with another provider or may have their loan balance re-credited for units of study commenced but not completed due to the provider's default:

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VET Student Loans students will receive assistance to continue their studies in a suitable replacement course with a replacement provider. Where there is no such course, a student will receive a re-credit to their HELP balance equal to the amount of the VET Student Loan used to pay tuition fees for the part of their original course which was not completed due to the provider's default;

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HELP students will be able to choose between continuing their studies in a suitable replacement course with a replacement provider, or a re-credit of the amount of FEE-HELP assistance, or HECS-HELP assistance received by the student for the affected unit. This reflects the small and diverse nature of the sector, where it can be unlikely for a student to find a suitable replacement course;

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impose obligations on defaulting providers to notify the relevant Tuition Protection Director and students of the default in a timely manner, and cooperate with the Tuition Protection Director;

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impose obligations on replacement providers to enrol students as soon as practicable, give the student course credits in recognition of their prior completed studies, as appropriate, and not charge students for the replacement component of the replacement course. These requirements facilitate efficient and fair treatment of students to allow them to continue their studies with minimal disruption.

A minor amendment is also proposed to the VSL Act to enable the Secretary of the department administering the VSL Act to refuse to revoke an approval on request if certain compliance action is being taken.

FINANCIAL IMPACT STATEMENT

The measure to expand the international TPS to cover VSL students, FEE- HELP or HECS-HELP students studying at a private education provider or TAFE is expected to generate $3 million over the forward estimates. This is a result of the projected revenue collected through the levy system.