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Auditor damns dept over vocational loans

AAP logoAAP 20/12/2016 Katina Curtis

A damning report into the soon-to-close vocational student loan scheme has concluded it was poorly designed and administered.

Costs blew out in the VET FEE-HELP program from $325 million in 2012 to $2.9 billion in 2015 as providers raced to sign up students for loans, in many cases for courses they had no ability or intention of finishing.

The Turnbull government has scrapped the scheme and replaced it with an entirely new program to start on January 1.

The Australian National Audit Office, which released its report into the original loans program on Tuesday, concluded there was no appropriate quality and accountability framework put in place and the education department didn't have the capaibility to identify emerging risks.

"Poor design and a lack of monitoring and control led to costs blowing out even though participation forecasts were not achieved," it states.

"In effect, the department's focus on increasing participation overrode integrity and accountability considerations that would have been expected given the inherent risks."

Some of the risks were identified when the scheme was expanded in 2012 but they weren't adequately addressed in legislation.

The auditor also found weaknesses in administrative processes for approving providers; risk, fraud and compliance activities; controlling payments; giving students information about their rights and obligations; and resolving complaints.

There was poor intelligence sharing regarding dodgy providers between the department, regulator and consumer watchdog, and an information campaign for students was only started in September 2015.

But the auditor acknowledges the government's overhaul of the loans, saying its report should help the department in administering the new program and support the design of other government policies.

Education Minister Simon Birmingham says the audit is an indictment of Labor ministers involved in designing the loans scheme.

"They should hang their heads in shame and apologise for the distress and damage they've caused," he said.

"This report clearly spells out the extent of the mess Labor made of VET FEE-HELP, which opened the floodgates to shonky providers who ripped off vulnerable students and taxpayers."

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