The government will crack down on dodgy colleges by requiring all private education providers to re-apply for taxpayer funds under a new vocational education and training (VET) student loans program announced on Wednesday.
Education minister Simon Birmingham said the new scheme will limit VET courses eligible to receive government funded student loans to those with a high likelihood of leading to employment opportunities.
Courses likely to be defunded include the Diploma of Fashion Styling, Diploma of Veterinary Chinese Herbal Medicine, Advanced Diploma of Therapeutic Arts in Counselling and Diploma of Energy Healing.
The tougher rules aim to weed out private colleges that have been caught rorting hundreds of millions of dollars in taxpayer funded loan payments by delivering substandard courses with poor completion rates and minimal job outcomes, and pocketing the money.
Birmingham said the current VET FEE-HELP system cost taxpayers $2.9 billion in 2015, student numbers grew by 400% and loans increased by 792% as colleges exploited the system's loopholes.
"While the 20 measures our government put in place over 2015 and 2016 have stemmed some of the losses in VET FEE-HELP, with total 2016 loans projected to be around 45% lower than in 2015, it is clear that a completely new program is essential to weed out the rorters and restore credibility to VET," he said.
“The waste and rorting and damage to vocational education simply cannot continue."
All private colleges will be assessed for government funding based on their relationships with industry, their student completion rates, the employment outcomes of their courses and their track record as education institutions.
Public providers and TAFEs will be granted automatic eligibility.
To stop student fee costs blowing out there will be three levels of loans caps available: $5,000, $10,000 and $15,000 depending on the delivery cost of the course.
Students will also be required to log in to and engage with the VET Student Loans online portal to ensure they are active and legitimate enrolments.
Any provider deemed to be performing poorly could be stripped of their approval and have their payments cancelled. The government also has the power to cap loan amounts and student numbers, and to limit the scope of courses.
Education providers will no longer be allowed to use "brokers" or directly solicit prospective students.
The new funding scheme is estimated to save $25 billion over the next 10 years, and if passed through parliament will commence from January 1, 2017.
The 144,000 current VET FEE-HELP students will be exempt from the new fee structure until the end of 2017.