Australian VET in the age of Trump

By Don Perlgut, CEO, Community Colleges Australia

(This article has also been published by Open Forum.)

With the upcoming inauguration of Donald J. Trump as US President on January 20th, what “spill-over” impact will his presidency have on Australian vocational education and training (VET)?

The Australian and US post-school educational systems are very different, with the same words often having dissimilar meanings:  “community colleges” in the USA, for instance, are usually public two-year institutions primarily run by cities and counties rather than states.  They frequently have more in common with Australian TAFE colleges than with Australian “community colleges”.

A few issues have crossed borders, especially that of student debt in the USA with its Australian corollary of the VET FEE-HELP scandals, although the American student debt does not have Australia’s progressive income-contingent and inflation-adjusted system.  Both Donald Trump and Hillary Clinton referred to student debt during the election; and the recent proposal by New York Governor Andrew Cuomo for free tuition at his state’s public institutions illustrates the issue’s continuing political charge.

The connection between student debt and for-profit higher education providers provides the biggest parallel issue.  As James Surowiecki wrote in The New Yorker (issue of 2 November 2015):

Dependence on student loans was not incidental to the for-profit boom—it was the business model…. In most cases, their profits came not from building a better mousetrap but from gaming the taxpayer-funded financial-aid system. Since the schools weren’t lending money themselves, they didn’t have to worry about whether it would be paid back. So they had every incentive to encourage students to take out as much financial aid as possible, often by giving them a distorted picture of what they could expect in the future.

Although describing the American experience, word for word that paragraph easily described the Australian situation – at least until the Australian Government’s October announcement that VET FEE-HELP would cease at the end of 2016.

Little publicised in Australia, the Obama Administration has worked hard to regulate and cut back the poor practices of the American for-profit university and higher education sector (which includes many institutions offering the equivalent of Australian VET).  The result has been steep enrolment losses in that sector since 2010, including the closing of the ITT Technical Institute chain and profit warnings from the Apollo Education Group, parent company of the well-known for-profit brand University of Phoenix.

Both candidates in the recent American Presidential election carried significant baggage regarding to private for-profit education.  Just after the November election, Donald Trump agreed to pay US$25 million to settle a number of lawsuits connected to his now-closed for-profit “Trump University”, which was not an actual degree-granting institution.

Former President Bill Clinton spent five years as the “honorary chancellor” and consultant to the international education group Laureate International Universities, and was paid US$17.6 million for his services.  (Bill also worked for the for-profit Dubai-based secondary education GEMS Education.)  Nine months before Bill started work for Laureate, then Secretary of State Hillary Clinton included a representative from Laureate at a private State Department dinner, at Bill’s suggestion.  While not Illegal, this connection was not a good “look”, a morally “grey” action that helped to blunt Hillary Clinton’s criticisms of Trump’s many ethical breaches, and enabled Trump to label her as “crooked” in the eyes of many of his supporters.  There’s also an Australian connection:  Laureate has three subsidiaries in AustraliaBlue Mountains International Hotel Management School, Torrens University Australia and Think Education Group (full disclosure: I taught a university-level course and consulted on another for Think’s APM College in 2013).

There are very few guideposts for what the new Trump Administration will do in higher education, partly because Trump’s post-school policies are so few.  His election platform states that he will:

“Work with Congress on reforms to ensure universities are making a good faith effort to reduce the cost of college and student debt in exchange for the federal tax breaks and tax dollars [and]…. Ensure that the opportunity to attend a two or four-year college, or to pursue a trade or a skill set through vocational and technical education, will be easier to access, pay for, and finish.”

Commentators have noted that Trump values his degree from the University of Pennsylvania and that Betsy DeVos, his pick for Education Secretary, is best-known for “promoting charter schools and school vouchers”. Like so many other policy areas, much is still unknown about Trump’s impact, although the effect on school education is likely to be more significant.

Because Trump is a private enterprise man, the for-profit education sector reportedly rejoiced on his election win, with their stock prices increasing.  But international education providers have expressed concern that Trump’s intention to ban Muslims and Mexicans might “send such students seeking a Western-style education to Canada, Australia or other countries not seen as hostile.”

By contrast, National Public Radio education commentator Claudio Sanchez has predicted that US “community colleges will finally get more of the attention they've been clamoring for”, because of Trump’s promised focus “on jobs, jobs and more jobs as part of his plan to rebuild the nation's economy and workforce.”

The American higher education sector appears to be cautiously optimistic about the coming Trump presidency.  The for-profit sector is unlikely to regain much traction due to recent extraordinary bad press.

Australia – for domestic reasons all our own – appears to be operating on a different timetable when it comes to vocational education and training.  The incoming VET Student Loans – now capped at just over Aus$2 billion per year – will bring a dramatic shake-up in the private for-profit VET sector, and thus for VET as a whole).  In late December, shares of the New Zealand-based and listed company Intueri Education Group dropped 94% when its application for VET Student Loans was rejected.  Numerous companies are likely to go the way of Australasian College Broadway – a recent recipient of more than $10 million per year in VET FEE-HELP – which went into administration on Christmas eve.