Independent VET learners are paying too much, ITECA says, concerned about extra charge

Early childhood education and care (ECEC) students who borrow money from the HECS-HELP loan system to study at independent tertiary education providers are being unfairly taxed, the Independent Tertiary Education Council Australia (ITECA) has claimed, saying that the 20 per cent additional charge levied to them is inequitable.

Currently students who access a HECS-HELP loan to study at an independent tertiary education provider pay a 20 per cent student loan tax. On a $40,000 course, this leaves a prospective early childhood teacher paying $48,000 for the same qualification as a publicly educated peer, something which presents a concern for the Council at a time when early childhood teachers are in increasing demand. 

The tax, ITECA said, “penalises students for investing in their future” and should be removed. 

“It’s simply wrong that students who study with an independent higher education provider have to pay the student loan tax over and above their student debt,” said ITCEA Chief Executive Troy Williams. 

“The travesty is that these students are treated differently from those studying at public universities who don’t incur the additional liability that comes with the student loan tax.”

The situation is also impacting the vocational education and training (VET) sector, where the VET Student Loans program also charges students a 20 per cent tax for taking out a loan when borrowing from the Australian Government to undertake a Diploma or higher qualification. 

An $18,000 Diploma in Children’s Services, if undertaken at a private RTO, costs a prospective educator $21,600. 

“As a nation, we want students to invest in their life and career goals. It’s not acceptable that the Australian Government levy the student loan tax on those seeking to gain new knowledge and skills,” Mr Williams said.

ITCEA believes the tax serves as a barrier to drive workforce productivity as the tax may deter some workers from investing in critical skills to support their career development once they have commenced a career. 

“To tackle growing skills shortages and provide a sustainable increase in real wages, Australia needs to improve workforce productivity. To do this, we need people to invest in their education and training, so it’s simply ludicrous that the government whacks students with a 20 per cent tax on top of their student loans,” Mr Williams said.

Currently independent skills training providers support around 85 per cent of the 3.9 million students in vocational training and independent providers support around 10 per cent of the 1.6 million students in higher education awards programs.