House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Education, Science and Training, the Honourable Dr Brendan Nelson MP)

Outline and financial impact

Outline

The Bill will amend the Higher Education Support Act 2003 (the Act) to:

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Insert a category of Table C providers to enable high quality foreign universities to be listed as overseas higher education providers, approved under the National Protocols for Higher Education Approval Processes by an authorised accreditation authority as listed in the Australian Qualifications Framework Register to establish an Australian branch and for that branch to have access to certain types of Commonwealth assistance [section 16-22]. Carnegie Mellon University is included as the first Table C provider.

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Specify the quality and accountability requirements that the Australian branch of an overseas provider in receipt of Commonwealth assistance must meet [Division 5].

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Specify which parts of the Act apply and do not apply to Table C providers [Division 5 and Parts 2-2; 2-3; 2-4; 2-5 and 3-2].

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Clarify that Table C providers have approval as a higher education provider from the time they are included in Table C [section 13-1, subsection 16-5(1)].

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Distinguish between listed providers and Table C providers [subsection 16-5(2)].

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Clarify that a body is not a Table C provider if its approval as a higher education provider is revoked or suspended [subsection 16-22(2)].

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Clarify that a higher education provider must comply with the regulations and the requirements of the Guidelines made under section 238-10 that apply to the provider [subsection 19-65(1)].

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Include a provision allowing the Minister, by legislative instrument, to make Guidelines for Overseas Higher Education Providers that would specify additional requirements or conditions applicable to Table C providers [subsection 238-10(1)].

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Clarify the meaning of an Australian branch of a Table C provider and the meaning of a Table C provider [Clause 1 of Schedule 1].

The Bill will also amend the Act in relation to tuition assurance arrangements for Higher Education Providers other than Table A providers. The aim of the amendments is to ensure that there is nothing in the Act that would prevent the tuition assurance requirements stipulated in the Higher Education Provider Guidelines from having effect. The amendments will clarify and strengthen the policy intent of the tuition assurance requirements as a consumer protection measure for students.

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The tuition assurance requirements will be expanded to cover situations where providers "cease to provide" units as a consequence of ceasing to provide the course of which the unit forms part (rather than only covering the situation where a provider ceases "to be able to" provide a unit) [sections 36-22A, 79-B, 79-20 and 104-42].

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The changes will give effect to the tuition assurance requirements, ie allow students to choose between "course assurance" (switching to a similar course at a second provider and receiving full credit for completed units) and "student contribution/tuition fee repayment" (receiving their money back for any uncompleted units).

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If the student chooses "course assurance", they can switch to a "replacement unit" to complete any unfinished units. If the student chooses course assurance, their SLE consumption and any HELP debt relating to the unfinished units continue to stand [paragraphs 79-20(d) and 104-42(d) and subsection 169-15(4)].

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If the student subsequently does not complete a "replacement unit" due to special circumstances and the student's SLE or FEE-HELP balance is re-credited, the provider of the replacement unit is not required to repay any amounts to the student or the Commonwealth, but the Guidelines may specify that another person for example, a third party guarantor or a tuition assurance scheme, is to pay the amounts specified in the Higher Education Provider Guidelines [sections 36-20, 36-22 and 110-5].

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If a student chooses "student contribution/tuition fee repayment", their SLE or FEE-HELP balance is re-credited [paragraphs 79-20(d), 104-42(d)], their HELP debt is remitted and the provider must repay amounts to the student and to the Commonwealth. A new obligation is imposed on providers who cease to provide work experience in industry units due to ceasing to provide a course of which the unit forms part. This obligation is to repay amounts to a student and to the Commonwealth if the student chooses the "student contribution/tuition fee repayment" option [section 36-22A]. The student's HELP debt is remitted as a consequence [subsection 137-5(5)].

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The provider's obligation to reduce SLE and to charge student contribution amounts and tuition fees is not to apply to providers of "replacement units" in the case of those replacement units [subsections 76-1(5), 169-15(1A)], 169-15(2A)].

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The provider's obligation to repay amounts for students who withdraw before the census date is also not to apply when students withdraw in circumstances covered by tuition assurance and choose "course assurance" [section 169-15].

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As a consequence of these changes, section 16-30 is amended to remove the Act's definition of tuition assurance requirements that would apply in the absence of guidelines. It can no longer work because the Act now includes concepts that must be given a meaning by the Higher Education Provider Guidelines.

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Separate from these changes is a change to clarify that the Secretary may act in cases where powers are conferred on providers "on the Secretary's behalf" [subsections 36-22(9), 36-22A(3), 79-1(2), 79-20(2), 79-25(2), 104-25(3), 104-27(3), 104-42(2)]. This gives rise to some consequential amendments of provisions relating to administrative review of the affected decisions [section 206-1].

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A transitional provision is included regarding the name change proposed in the Higher Education Legislation Amendment (2005 Measures No. 3) Bill 2005 from Open Learning Australia to Open Universities Australia.

The Bill also makes a number of technical amendments to the Higher Education Funding Act 1988 , the Higher Education Support Act 2003 and the Higher Education Support (Transitional and Consequential Amendments) Act 2003 as a consequence of the commencement of the Legislative Instruments Act 2003 on 1 January 2005.

Financial impact

The estimated financial impact of providing Carnegie Mellon University postgraduate students with access to FEE-HELP is minimal. Over the forward estimates period (2005-06 to 2008-09) there is a negligible impact on the fiscal balance ($0.1 million), expenses amount to $0.7 million and headline cash is -$2.6 million. The costing is based on around 12 students taking out a FEEHELP loan in 2006, 23 in 2007, 35 in 2008 and 46 in 2009. This equates to around 60% of eligible students taking out a FEE-HELP loan each year.