The private education sector, comprising both higher education and VET institutions, is facing a highly uncertain future. The Government’s enrolment caps and targeted restrictions for private providers, particularly those heavily reliant on international students, will limit growth and will likely reshape the private education landscape. The financial sustainability of institutions will be challenged, as the Government has seemingly failed to understand, or has ignored, the basic economics of operating a viable business.
What may be the impact of these proposed changes? The Independent Tertiary Education Council Australia (ITECA) reports that college closures are “inevitable”, following the Government’s most recent release of enrolment caps for private VET providers. It predicts that up to 300 independent colleges will close.
This is serious.
Enrolment caps
Around 94,500 new overseas student commencements (NOSC) have been allocated to the VET sector (public and private) under the government’s National Planning Level and a further 30,000 to private universities and non-university higher education providers. Of the 94,500, about 5,500 are allocated to TAFEs and the remainder to the private sector.
We now know that letters to the higher education sector were sent to providers by the Department of Education the day after the second Senate Committee hearing into the ESOS Amendment Bill, and continuing this form, the Department of Employment and Workplace Relations (DEWR) started sending out letters to private VET providers as the third Senate Committee hearing was winding up, late on a Friday afternoon, continuing into the evening and over the weekend.
The methodology for calculating caps in the private VET sector is seemingly designed to penalise providers whose business model primarily targets international students. That is, where international students accounted for less than 80 per cent of the provider’s total count of students in 2023 a provider will be able to maintain new overseas student commencements in 2025 at approximately 2024 levels. Where international students accounted for 80 per cent or more of a provider’s total student count in 2023, the provider’s 2025 allocation will be lower.
Impact of caps
NOSC allocations for 2025, and the impact that the imposed reduction will have on businesses, are coming to light, a very bright light. These are some that have been made public:
- Ikon Institute of Australia has an allocation of 200 NOSC for 2025, an 87% reduction on its 2024 commencements. Most of the reduction, according to Ikon, will impact it’s Bachelor of Early Childhood Education, an area of skills shortage in Australia. Ikon’s CRICOS capacity limit is 2282.
- ITECA has written to the Minister for Infrastructure, Transport, Regional Development & Local Government, Catherine King, about the impact of caps on Australian’s aviation schools. According to ITECA, “The aviation training sector relies heavily on international student enrolments to maintain operational viability”. According to CRICOS, almost 30 private providers offer pilot or aviation-related training, and for most, these are the only courses they are CRICOS-registered to teach.
- Australian College of Business and Trade (ACBT Education Pty Ltd) has a CRICOS capacity limit of 512. According to Liberal MP, Jason Wood, ACBT’s NOSC for 2025 is 1.
- Asset College (Asset Training Australia Pty Ltd) reports that its NOSC for 2025 is 3, with a CRICOS capacity limit of 80. Asset College is an example of a provider that has gone through the process of achieving CRICOS registration relatively recently, with the intention that international students be about 1-2% of its total enrolments, only to find that this was a waste of time.
- Melbourne City Institute of Education, according to a report in the AFR, has a NOSC of 188 for 2025. It’s CRICOS capacity limit is 2936.
Ideology
The Government’s narrative about measures in the ESOS Amendment Bill, including caps, is that it targets “shonks and crooks” who are exploiting and undermining the international education sector (and it’s not referring to public universities!). The Minister for Education, Jason Clare, has been particularly critical of the growth in VET enrolments post-COVID, most of which has been in the private sector.
It’s worth recalling at this point that when he was questioned about how many ‘dodgy’ providers the Government was concerned about, former Minister for Skills and Training, Brendan O’Connor, said in October 2023, “probably more than a dozen, but under 100” (TKN 031023).
However, ITECA has accused the government of basing caps on “ideology and not logic” and they may just have a point. The NOSC methodology for VET providers would appear to support ITECA’s claim, as it overtly penalises VET providers with a majority international students. At the same time, the arbitrary nature of the methodology does nothing to target providers that are ‘dodgy’.
The Koala has also called out the Government’s claim that it axed ‘150 ghost colleges’ (Fact check: “Over 150 ghost colleges axed”). ASQA provided details to the Senate Committee on notice, including confirming that the providers the Government had referred to were lapsed, rather than ghost, providers. Claire Field has done an excellent job of unpacking what ASQA said in its response, including finding that only 13 of 144 lapsed providers were CRICOS-registered.
One of the sector’s criticisms of the national VET regulator is that it wants greater clarity about what action ASQA is taking. ASQA’s response to the Senate Committee is an excellent example of this, telling the Committee that it can “check a provider’s current registration status via the [national register] database”, in response to Senator Henderson’s question about the identity of the ‘150 ghost colleges’.
Public vs private
Another challenge for the private sector (VET and HE) in the enrolment caps debate has been the distancing of the public sector from private providers. Examples include:
- The Group of Eight recommending in its submission on the ESOS Amendment Bill that “public providers, universities and TAFE” be exempt from enrolment limits.
- Universities Australia recommended that the Government “categorise universities and TAFE institutions separately” in its submission.
- “Public provision should be prioritised in the overall growth strategy for international students”, said TAFE Directors Australia.
Indeed, the primary focus of the hearings by the Senate Committee into the ESOS Amendment Bill has been on the university sector. During my appearance on the second day of the hearings, speaking from a whole-of-sector perspective, I said that I would like to see a partnership between the government and the sector to determine what sustainable growth looks like. Senator Henderson’s response was, “In terms of talking about a partnership or discussions or promises, none of that gives Australian parents and Australian students the certainty as to the type of education they’re going to receive… We’re talking about public institutions delivering education, set up for Australian tertiary students”.
(As a side note, it will be interesting to observe Henderson’s reaction to the private sector in the fourth hearing, given the private sector does not have the main purpose of delivering to Australian students, but has been a major contributor to the growth of the sector post-COVID).
However, the polarisation of public vs private, along with a focus on public universities, doesn’t allow for any nuance. Private independent pathway colleges that lead to degree programs and quality private providers that have been in operation for decades come to mind.
Own goals
And yet, despite the advocacy of peak bodies and quality private providers, unfortunately, there are a small number who do behave badly, tarnishing the reputation of the entire sector. With institutions aware of their caps for 2025, The Koala has seen examples of poor behaviour by a small number of providers offering extraordinary incentives for 2024 enrolments to beat the 2025 NOSC, including:
- 50% commission offered to agents for onshore student transfers commencing by 16 December 2024.
- 40% commission and a $2000 marketing incentive (for courses of 2 years or more) for 2024 intakes.
(Note that the Government has previously announced that once the ESOS Amendment Bill has passed it will make changes to the National Code of Practice to prevent the payment of commissions for onshore student enrolments).
Surely it is this behaviour that the government seeks to stamp out.
Conclusion
There may be cause for some optimism for the private sector. Following the release of VET sector NOSCs, the Senate Committee has re-opened submissions into its inquiry and will hold a fourth hearing early next month. The Koala expects that most new submissions will be from private providers telling the Committee just how badly the Government’s plans will impact them.
Failing this, as reported by The Koala, there is still the possibility of legal action (Legal case against proposed reforms gathers momentum).
