Fact Sheet - Students - Prices and fees for VET under Smart and Skilled - 30 July 2013

Based on Pricing VET under Smart and Skilled - Draft Report July 2013

The NSW Government is currently developing key components of Smart and Skilled, which will reform the way government-subsidised vocational education and training (VET) is provided in the state. It has asked the Independent Pricing and Regulatory Tribunal of NSW (IPART) to advise it on one of these components – the price and fee arrangements (see Figure 1).

Figure 1 Elements of Smart and Skilled

We have released our draft report and are seeking comments from stakeholders, which we will consider in making our final recommendations to the Minister for Education and Communities. Submissions are due by 27 August 2013. Late submissions will not be accepted. This fact sheet summarises our advice in 3 areas of particular interest to VET students and potential students. These are:

• our recommended approach for setting the base prices registered training organisations (RTOs) will receive for providing the training
• our recommendation for setting student fees
• how these recommendations will affect student fees from July 2014.

1.1 Setting the base prices paid to RTOs

The prices RTOs will receive for providing training include a base price for each course and qualification on the skills list. This price must cover the costs involved in providing the training required to complete the qualification.

Our analysis and consultations with stakeholders clearly show that these costs vary widely, depending on particular course and qualification. The variation in cost depends mainly on 2 factors:

• the specific Units of Competency (UoC) that make up the qualification – for example, what equipment and facilities they involve, and the teaching hours they require, and
• the level of the qualification – for example, whether it is a Foundation skills course that typically requires 6 months training, or an Advanced Diploma that requires 2 years training.

Therefore, we have recommended an approach for setting base prices that takes account of both these factors. This will ensure that the price for a particular course or qualification reflects the specific costs of that qualification.

The cost of training can also vary by the quality of the training provided. Under Smart and Skilled, RTOs will be required to meet the quality standards defined by the quality framework (shown in Figure 1). For example, this framework includes Training Packages that set out units of competency to be covered in order to complete courses and qualifications in different industries. Our approach for setting base prices also takes account of the required quality standards, and ensures that these prices are sufficient for RTOs to meet these standards.

1.2 Setting student fees

We think that students and the Government should both contribute to cost of providing VET, as both benefit when students gain VET qualifications. For example, these students are more likely to get a job and earn a higher income, which means the Government can earn higher taxes and pay less in welfare benefits. Therefore, it is appropriate that both contribute to the costs of VET.

For a student’s first post-school qualification, we have recommended that the student fee should be set to reflect 40% of the base price, and the government subsidy should reflect the remaining 60%.^[1]

1.3 Impact on fees for students from July 2014

Our recommendations on setting base prices and student fees will mean that students starting VET courses and qualifications on the skills list in 2014 are likely to pay different fees to those that current students pay for the same qualifications. The impact on individual students will vary widely – for some students, fees will go down, for others they will go up by a relatively small amount per year, and for others they will go up more significantly. This impact depends on a range of factors. On average, fees will be higher from July 2014.

One key factor is how many years the student takes to complete the qualification. Under the current arrangements, fees are charged on an annual and per-semester basis. From July 2014, like base prices, they will be charged on a per qualification basis. This means the impact of the fee changes will depend on the time they take to complete their qualification. Other important factors are:

• what qualification the student undertakes, including what industry group it relates to and what level it is
• whether they are entitled to a concession fee or are exempt from fees
• whether they are an apprentice or new entrant trainee.

1.3.1 Fee impacts by qualification

Looking at all students who pay the standard student fee for their qualification (ie, those who are not eligible for concessions or exemptions and who are not apprentices or trainees), we estimate that:

• Around 16% will see a fee decrease. These are the students who undertake a course or qualification that involves relatively low costs, and/or one where the current student fee reflects a higher share of those costs than appropriate.
• Around 24% will face a fee increase of less than $500 per qualification. If they take 2 years to complete the qualification, they will pay up to an additional $250 per year.
• Around 37% will face a fee increase of between $500 and $1500 per qualification. If a student takes 2 years to complete the qualification, they will pay up to an additional $750 per year.
• Around 22% will face a fee increase of more than $1500 per qualification. These are likely to be students undertaking a qualification that involves relatively high costs, and/or one where the current student fee reflects a lower share of those costs than appropriate. If they take 2 years to complete the qualification, they will pay at least an additional $750 per year.

Looking at the different qualification levels, more than 85% of students doing a Certificate II and Certificate III qualification will face a fee increase of more than $500.^[2] Based on the typical time taken to complete these qualifications, this translates to at least an extra $250 to $330 or more per year. These students are more likely to be training in a technical or trade-based area, where training costs are relatively high.

Almost 25% of students undertaking a Certificate IV or higher qualification will pay lower fees. Roughly one-third will pay no more than $500 per qualification. Based on the typical time taken to complete these qualifications, this translates to no more than an extra $250 per year. These students are more likely to be training in business, administration or general education, where training costs are relatively low.

Students undertaking some higher level qualifications will face fee increases of more than $1,500, while those undertaking qualifications in some high-cost industry groups could face increases of $6,000 or more per qualification. These higher fee increases reflect the higher base prices for these qualifications, which in turn reflect the high number of teaching hours and/or involves costly equipment. For example, Certificate III in Flooring Technology is a high cost course as it involves a larger number of teacher hours and equipment costs. Diploma of Nursing (Enrolled-Division 2 nursing) however is high cost as it involves a high number of teacher hours. Further examples of these high-cost qualifications include:

• Certificate III in Cabinet Making
• Certificate IV in Engineering
• Certificate IV in Electrical – Renewable Energy
• Diploma of Laboratory Technology
• Diploma of Furniture Design and Technology
• Advanced Diploma of Interior Design.

Note: The current fee per qualification assumes that a student takes 1.5 years to complete a Certificate I or Certificate II, and 2 years to complete a higher level qualification Fee increases include both initial and subsequent qualifications. Totals may not add due to rounding.
Source: IPART calculations.

1.3.2 Fee impacts for students eligible for fee concessions or exemptions

Currently, all students eligible for a concession fee pay a flat fee of $100 per year (expect those studying fee-exempt courses). Under Smart and Skilled, concession fees will be set on a qualification basis (in line with base prices and standard student fees). They will also vary by qualification level – ranging from $100 for a Foundation course and $500 for Diploma or Advanced Diploma.

The impact on individual students will depend on the qualification level they undertake and the amount of time they would take to complete it. For example, under the current arrangements, a concession student who takes 2 years to complete a Certificate III qualification will pay $200 in fees, while another student who takes 4 years will pay $400. Under our recommended arrangements, the first student will pay an additional $200, while the second student will pay the same fee.

There will be no change in the eligibility requirements for concession fees. There will also be no changes to eligibility requirements for exemptions to fees, so these students will face no impacts.

1.3.3 Fee impacts for apprentices and new entrant trainees

Under the current arrangements, these students’ fees are much more heavily subsidised than other VET students’. Because we have recommended moving towards consistent arrangements, apprentices and trainees may face larger fee increases than other students, particularly if they are undertaking a higher level qualification in a technical or trade-based industry where training costs are relatively high.

Fees for almost all apprentices and about two-thirds of trainees will increase by $1,000 or more per qualification. We have recommended that fee increases for apprentices and trainees be initially capped at $3,000 per qualification to ensure that no individual student faces a higher fee increase than this. If a student facing this maximum fee takes 3.5 years to complete their qualification, they pay an additional $379 in fees per year.

^a There are no Certificate I apprenticeships or traineeships, no Advanced Diploma apprenticeships and very few Advanced Diploma traineeships.
Note: The current fee per qualification assumes that apprentices are enrolled for 3.5 years and trainees are enrolled for 1year for Certificate II qualification and 2 years for higher level qualifications. Totals may not add to 100 due to rounding.
Source: IPART calculations.

^[1] For a student’s subsequent qualifications, our recommended approach is to set the student fee to reflect 45% of the base price.
^[2] Compared to 36% for Certificate I and lower, and less than 50% for Certificate IV and higher.