On Friday, in the final minutes of the 3rd senate hearing into the ESOS Act, the government started sending out its cap allocations to private VET colleges. Never before has the Koala seen letters of this impact sent out on a Friday night. Some providers reportedly received theirs after midnight.
Whilst a consolidated list is not yet in the public domain, the Koala has been busy talking with individual VET providers to ascertain the scale of devastation that has been handed down.
One college says that they have been provided an allocation of 3 international places under the new capping arrangement. “This makes all our investment in becoming a CRICOS provider, as well as investing in all the infrastructure and systems in compliance with legal requirements a complete waste of time and resources,” they said.
Another college stated, “We had more than 50% domestic students in 2023, and in 2024, we had 350 new commencements in VET Intl. We have been given a cap of 169!”.
ASX listed EDU Holdings (EDU), the operators of the well-known ALG vocational schools, released an announcement to market on Monday morning; “On 6 September 2024, ALG received notification from the Department of Employment and Workplace Relations of its provider limit (cap) for calendar 2025, which is proposed at 447 new international student commencements. This compares to 907 commencements in calendar 2023 and 779 commencements for the year-to-date in 2024 (up to and including Term 3 2024). The imposition of the 2025 cap, which represents a 51% reduction on ALG’s 2023 commencements and an approximately 57% reduction on its projected 2024 commencements, will likely result in a decline in total student enrolments in 2025 compared to 2024. The decline is likely to be gradual over 2025, benefitting from ALG’s 2-year average study duration and progressive growth during 2024.”
NextEd (NXD), the operators of vocational training brands, including Greenwich College, remain in trading halt while the Board decides on a response to the cap announcement. An announcement is due imminently.
Although initially mooted as a policy step to reduce the cost of housing, members of the Labor government including Assistant Immigration Minister Matt Thistlethwaite have since been eager to spin the imposition of a cap as a ‘quality and integrity measure’, though have provided scant details as to how the proposed legislation will meet this goal.
Ian Pratt, Managing Director of Lexis Training, has firmly rejected the messaging. “By imposing a cap on institutions based on 2023 numbers, the government has rewarded those ‘shonky operators’ that pursued a ‘growth at all costs’ strategy during the period. Many of these schools delayed the return to face-to-face classes and offered only low-cost online courses. This allowed them to pay outrageous commissions and offer tuition fees set at below the cost of delivery for other schools. Many focused on single nationalities and operated at what was at very least on the edge of their accreditation requirements. Those are the schools that now have the largest caps going forward. Those of us who pursued a strategy of managed growth, focusing on quality delivery and responsible marketing strategies, appear to have been punished by receiving a smaller cap allocation. Go figure”.
This message was echoed by the Director of a Sydney based College, who in an effort to maintain an AL1 rating cancelled contracts with agents deemed unreliable and refused enrolments for whole nationality groups across the course of 2023, shrinking the size of their school over the course of that year before growing again to enrolments of around 400 students in 2024. They have been assigned a cap of fewer than 40 students for the year and face an uncertain future.
Pratt reports that Lexis has received a cap at ‘somewhat below 50% of current numbers’ for 2025. “We have enough domestic facing product and overseas operations to weather this storm, but are facing some very challenging times in our core ELICOS and VET businesses in Australia. Our focus now will be on maximising the return on each of our capped seats, and locking in packaging from our English programs. We are aware that this is an entirely manufactured crisis based on some fairly callous political expediency, and the ‘on’ switch will likely be flipped again at some point following the next election. So, the focus is on minimising the damage until then. I imagine similar conversations will be taking place in the marketing offices of schools around Australia today”.
The first sign of the damage may already be upon us, with The Koala understanding that a significant national player has just placed one of their campus offerings on Queen Street, Melbourne, on the market for leasing.
It isn’t just current international providers feeling the chaos. The Koala has spoken with a college with no current CRICOS registration. It has been included in the same government letter drop and has been provided a cap allocation even though they are not currently providing to international onshore students or registered to do so, and there may be more in this situation.
Over the weekend, English Australia CEO Ian Aird put out an email to English Australia’s membership saying, “English Australia has already spoken with a number of member colleges who also deliver vocational programs. For some, these enrolment caps for 2025 are devastating. In the coming days, we will be reaching out to members to talk, to gather data, and to better understand the situation.”
“Right now, our chief concern is the people badly impacted. We are hearing that in some cases the limits are so bad as to mean imminent campus and college closures, significant job losses, and students ejected with nowhere to go. So soon after the COVID border closures caused devastation, after the massive effort to survive and bounce back, we know this will be not just a financial blow. This is emotionally devastating.”
“If you have been hit hard in this, please reach out to us. We urge colleagues to reach out to one another to give and get support. In the face of this government’s cavalier and reckless treatment of this sector’s business owners, workers, and students, we must stand together and support one another.”
“Personally, I urge those who are in a tough spot to reach out for professional support.” He says he is providing details for Lifeline and Beyond Blue.
CEO of the International Education Association of Australia, Phil Honeywood says, “Whilst a lot of the narrative about the government’s so-called dodgy colleges has only ever related to a small minority in the meantime, we now have long-standing high-quality providers who are informing IEAA that they will be out of business by the new year.”
“Allocations of 10 or 20 students totally overlook the cost of infrastructure and may serve to dumb down the employment of quality teachers,” he says.
Right he is
Chief Executive of the Independent Tertiary Education Council of Australia (ITECA), Mr Troy Williams, says, “The allocations will be devastating for hundreds of international education providers that deliver quality outcomes for their students and the staff they employ.”
“The impact of these cuts on the number of international students able to come to Australia is staggering with up to 300 independent colleges expected to close. Their employees will lose their jobs, as will other employees in colleges that will have to scale down to survive,” he said.
The Koala’s heart goes out to those affected by the indicative VET cap letters and hopes some logic prevails before the entire industry is burned to the ground.
Comments 1