The chief executive of training organisation Republica Education says Australia needs to rethink how private colleges, TAFEs and universities deliver higher education after government policy contributed to Republica entering liquidation this week.
The company’s chief executive Ryan Trainor told SmartCompany the liquidation of Republica Education Pty Ltd, which until recently had five specialist training schools in the area of beauty and design under its umbrella, is part of a restructure and “pivot” on his part away from accredited education.
Trainor, who previously sold his former business Franklyn Scholar to Kaplan for “between $50 and $100 million”, says government changes to approved courses for VET-FEE HELP at the end of 2016 mean that it’s no longer viable to stay in that training space.
On January 1, 2017, a new VET student loan system came into effect, which capped the loan amounts students could take out for a variety of courses, and introduced a new list of approved courses and providers that were eligible for government funding.
While the new arrangements serve the purpose of addressing unscrupulous providers in the sector, Trainor says they also have the consequence of hurting colleges doing the right thing.
“I actually really support the changes,” Trainor says.
“But there’s unintended consequences sometimes, and the reality is that it’s created an inequitable system. Unfortunately, when you sit back you have to say, ‘is it financially viable [now]?’”
There have been a number of high profile collapses of training colleges over the past few months, including beauty trainer Australasian College Broadway in December, and Sage Institute of Fitness earlier this month.
The liquidation of Republica Education Pty Ltd comes after Trainor made the decision to close one of its colleges, Tractor Design School, last month.
Two of the other training colleges under its umbrella, Beauty EDU and Mercer College of Interior Design, have been sold to other training providers and will continue to operate under those new ownership arrangements.
Meanwhile, The BSchool and CG Spectrum schools will continue to operate, although not in the accredited education space. Current students will have the option of having some courses taught out to completion, or moving on to other training providers.
Trainor says that while he is proud to have managed the restructure the operations without affecting the studies of students affected, Australia needs to have a broader view on higher education.
He believes there is “more pain to come” in the vocational education sector as the effects of the funding changes are felt.
“You need to look at this things and you need to be pragmatic. But when you make these changes, the challenge that we have at the moment is that there’s more pain to come in the vocational industry,” he says.
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“We need to look at education from private providers TAFE. Then you’ve got universities where a lot of students can access funding, but that presents a whole lot of other challenges, like first year drop out rates. We need to think wider now about what is the education solution across private, TAFE and university [sectors].”
Trainor says there are no staff working for the Republica Education Pty Ltd company any longer, and the registered training organisation (RTO) license held has been voluntarily revoked.
He will now look towards corporate education projects and continue to be involved with BSchool and CG Spectrum into the future.
“We’re looking at a range of options now … [in] corporate education, including looking at the workplace and future skills [needed] in the workplace,” Trainor says.
“Commonwealth is the largest creditor”
James Downey, the liquidator appointed to Republica Education Pty Ltd, told SmartCompany it would come “as no surprise” that registered training organisations are facing challenges after the changes to funding arrangements, and that some have been caught up in the government’s quest to stamp out unscrupulous providers.
“As with other high profile training providers, this is largely as a result of federal government changes,” Downey says.
“I’m not suggesting for a moment that this was the case with Republica, but there were other organisations within the sector who were apparently rorting.”
While Downey would not reveal the scale of debt owed by Republica Education itself, he says there are a small handful of creditors.
“I think it’s fair to say the Commonwealth is the largest creditor,” Downey says.
“It would come as no surprise,” Downey says, highlighting his belief that the government was aware there would be some fallout from the funding policy changes, which could lead to training organisations facing challenges.