Concerns have been raised that some training colleges are using new government loans to put low-income people in deep debt.
The ABC has learned that some private colleges are targeting areas of Sydney with high rates of social housing and residents whose first language is not English.
They offer expensive training qualifications and sign people up for expensive government loans, sometimes without their knowledge.
The government has received 17 reports this year from students who unknowingly incurred debt.
It is of particular concern that colleges are using incentives such as laptops and cashback offers to encourage students to enroll.
The government said it had received 13 complaints this year about aggressive marketing by agents working for training schools.
Department of Education documents suggest that offering inducements is unethical and that such practices could potentially violate the law.
In recent years, the government has extended HECS-style university loans to all degree courses and some Certificate IVs.
The new program is now called VET FEE-HELP and has led to the opening of many new private training schools.
Students who take out debt do not have to make repayments until they earn more than $53,345.
Many students from disadvantaged areas do not realize that debt will affect their ability to take out loans, such as mortgages, in the future.
With certain qualifications, many students are unlikely to earn enough to pay off debt, costing taxpayers dearly.
Additionally, many colleges use a network of affiliations with other training schools to increase enrollment.
This means that some unsuspecting students enroll in one college only to study in another.
A Department of Education spokesman said the government was aware of some cases of “unscrupulous behaviour” among education brokers.
They said new standards would be in place from January next year and the ministry was considering new measures.
The new standards will make colleges more accountable for the behavior of their brokers and give the government the power to prosecute.
The courses cost twice as much as the TAFE
In a sparsely furnished office space above a grocery store on Cabramatta Road is Aussia Training Centre.
Aussia opened in August and is not a registered training organization.
It announces only three streams: early childhood, commerce and management.
Aussia charges $11,000 for an early childhood diploma.
By comparison, TAFE charges $1,500 for its subsidized course and $5,000 for one of its commercial versions of the course.
Aussia encourages students to defer their course fees to the government’s VET FEE-HELP program, which means students don’t pay back until they earn $53,000.
In Australia, the median salary for an early childhood educator is $49,000, meaning many are unlikely to repay debt.
The Federal Ministry of Education states that it is against the rules for unregistered providers to claim that they are offering VET FEE-HELP debt under their own name.
Thuy Tran and her sister were recruited to Aussia by a Miller TAFE campus student who also worked as a marketer for Aussia and distributed flyers to students.
Her Australian husband, Paul Abela, said Ms Tran’s English was limited.
When she signed up, she was under the impression that the course was free.
“Thuy’s fluency in English might have been a bit difficult for her at the degree level,” Mr Abela said.
The sisters were told they would be given a laptop and $1,000 to take the course.
Thuy said she thought it was a government program to help her find a job and was worried other students would be misled as well.
When Mr Abela realized the couple were $11,000 in debt, he sounded the alarm.
The couple tried to get out of debt without success.
“I started wondering how they could target Asians for this course,” he said.
Mortgage brokers have warned that formation debt is not a debt-free situation.
They affect future lending capacity for personal loans, home loans and credit cards.
Mortgage broker Richard Windeyer said when a person’s income exceeds the repayment threshold, employers must withhold VET fee payments.
This reduces the potential borrower’s income and could put them at risk of default or inability to repay the loan.
“Different lenders will calculate loan utility in different ways and it may depend on the loan product chosen,” he said.
Laptops for learning
The ABC has learned that a number of registered and unregistered training organizations offer laptops as incentives to enroll in courses.
By doing so, students are signing up for debt of up to $13,200 after government debt charges are included.
In five years, this debt can reach more than $15,000 due to annual indexation.
Aussia is offering a laptop worth up to $700 via store voucher.
They also offer $500 if students complete a 12-month course and $1,000 if they complete two courses.
Students are also encouraged to refer friends to receive $250 or $500 if their friend takes two classes.
Department circulars suggest offering laptops and cash inducements are considered unethical practices and potentially a violation of the law.
The Australian Skills Quality Authority (ASQA) last year reviewed the marketing and advertising practices of training schools.
He revealed that almost half of them were marketing and advertising using misleading information, potentially misleading consumers and undermining the training system.
“At the end of this practice, it appeared that some organizations were collecting data from sources such as the National Training Register, creating lists of RTOs to attract students.”
Company denies Aussia ties
Aussia offers students documents indicating that they will study in the Dubbo-based access group training.
Access Group Training managing director Jim Jane said he had never heard of Aussia.
However, Access Group Training has a business deal with a company called Future Academy, which has a deal with a company called Comsec.
Comsec has an agreement with Aussia.
Neither Comsec nor Aussia are registered training organizations.
The ABC has learned that it is common for providers to use third-party companies to help recruit students, market courses and increase market share.
Mr Jane said Aussia did not have permission to use the Access Group Training name.
He said Access Group Training complied with all regulations and wrote to students when they became aware of complaints.
“I don’t know who Aussia are,” he said.
Mr Jane said they have a commission-based agreement with Future Academy for each student recruited.
“We have relationships with people who market – that’s the nature of this business – yes, we use people who market to people in the community,” he said.
He said they had recently been made aware of Thuy and his sister’s situation.
“I don’t know where the papers went, but we certainly don’t have papers for these people. They are definitely not registered with us.”
Access Group Training has filed a formal complaint with the Education Department.
“I don’t know who’s out there who thinks they’re registered with us and they’re not,” Mr Jane said.
Companies must be a registered training organization to receive VET FEE-HELP funds.
He said that while the majority of colleges helped people find jobs, there were “cowboys” there.
“It’s a good program and it’s tainted by the activities of people who aren’t accredited training organizations,” Mr Jane said.
“People who are in the market looking for people to sign up through RTOs who are willing to hand out money and that should be stopped.”
Targeted retirement homes
Industry figures suggest there are also reports of other colleges targeting public housing areas and aged care homes.
A man in a council housing area in Warwick Farm, Sydney’s west, told the ABC he was encouraged to take out a loan just to get the free laptop, and he didn’t did not need to attend classes.
However, as he was only 15, he was not eligible.
In a circular sent to training providers, the Education Department said it had received numerous complaints about aggressive marketing tactics.
- Putting people in debt without their knowledge
- People unable to get out of debt
- Target people who have retired or left the labor market
- Offer incentives
- Misleading claims about a student’s ability to find a job and earn money
“We continue to receive complaints about sales agents targeting students (including non-English speakers) who do not necessarily have the ability, commitment or intention to study or an understanding of the HELP debt that they will incur,” he said.
“Unethical and misleading course marketing that comes to the attention of the department may be investigated as part of compliance activities and may be reported to ASQA for further investigation. .”