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New VET student loans come into force

AAP logoAAP 31/12/2016 Liza Kappelle

The federal government's new vocational loans scheme aiming to ensure only high-quality training providers get approved has begun with more than 26,000 students opting in and almost 200 providers provisionally signed up.

The VET Student Loans program replaces the troubled VET FEE-HELP scheme that saw costs blow out 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.

Under the Turnbull government's new program, which begins on January 1, the number of courses eligible for loans has been more than halved to about 350 and loans are capped at $5000, $10,000 or $15,000 based on what the government believes delivery costs should be.

It's expected 90 per cent of the loans will fall into the $10,000 band.

All private providers have to reapply to be eligible to offer loans, though some high-quality organisations have been provisionally approved for six months until the end of June during the transition process.

Minister for Education and Training Simon Birmingham says more than 26,000 students have opted into the new scheme and 193 training organisations have been granted the provisional approval.

"VET Student Loans includes a range of new measures to protect students and taxpayers, address skills shortages and ultimately restore the reputation of the vocational education sector," Senator Birmingham says in a statement.

VET FEE-HELP students who haven't completed their courses can opt in to be "grandfathered" in the scheme and should contact VET Student Loans before they resume studies in 2017 to ensure they get continued support, he says.

The Australian National Audit Office released a report into the former loans program in December that concluded there was no appropriate quality and accountability framework, and the education department didn't have the capaibility to identify emerging risks.

The new VET Student Loan scheme includes:

* bans on recruitment brokers and cold-calling potential students;

* requirements for students to show they're active; and

* powers to cap provider loan amounts and student numbers, and to suspend poor performing providers.

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