Private colleges will be banned from luring vulnerable students into training courses by offering them free iPads or laptops and will no longer be able to offer "miraculously" short diploma courses under a federal government crackdown.
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The new regulations, to be announced by Assistant Minister for Education and Training, Simon Birmingham, on Thursday, follow a series of recent scandals at some of the country's largest private training providers.
The ban on providers offering inducements such as cash, meals, prizes and laptops will come into effect in 20 days' time with further regulations to be introduced by June.
The government will also make it impossible for private providers to levy all fees in a single transaction so that students who drop out early in a degree are not saddled with large debts.
Senator Birmingham said minimum numbers of study will be introduced to end a trend towards "miraculously" short diploma courses of one or two units.
Training providers will also be held responsible for any dubious or misleading marketing practices by their agents and brokers. There will be tougher assessments of students educational capabilities and it will be easier for the government to cancel student debts if colleges breach the new guidelines.
"These reforms should have an instant effect in the market and should go a long way to ending the business model of the dubious operators," Senator Birmingham said.
"A VET FEE-HELP loan can help students improve their lives and careers and the government is not going to let scammers take advantage of this valuable program.
"The unacceptable activities of some training providers are leaving vulnerable Australians with a lifetime of unwanted debt, taxpayers with liabilities that may never be repaid and are damaging the reputation of the many good public, private and not-for-profit training providers."
The government will also increase the number of random audits of private vocational providers.
Careers Australia, one of the country's biggest training providers, was accused last month of employing door-to-door salespeople who targeted potential students in disadvantaged areas by offering them free laptops and enrolling students with fake entrance exams.
Another large training provider, Evocca College, is under investigation by the federal regulator after it was accused of having had a graduation rate of about 10 per cent despite claiming more than $290 million in government funding through VET FEE-HELP.
The value of HECS-style loans for vocational students has blown out from $325 million in 2012 to $1.5 billion last year under relaxed conditions introduced by the Labor government – double the expected rate of growth.
Enrolments in business and management diplomas surged by 170 per from 2012 to 2013 and by a further 195 per cent the following year.
According to the Grattan Institute, 40 per cent of loans to vocational students are not repaid compared to 20 per cent for those with bachelor degrees.
