Ask an experienced teacher what needs to change on the front line of international education and the response is blunt.

"We need to blow the whole thing apart and start being honest about what's happening," says the teacher, who the Herald has agreed not to name. "Because it's not about education at all."

"I'd like to see New Zealand recognise that it's a scam, because that's at the heart of this. What's really behind it is they're coming for visas, not quality education."

The teacher, who has worked at several private training establishments (PTEs), says far too many institutions routinely accept students despite their hopelessly poor English and give them answers to ensure they pass.

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Several other staff members who have spoken to the Herald say the same.

Critics point to results at the disgraced New Zealand International Academy, which shut down in August after two staff went public with claims they were told to prepare fake results for more than 250 English language tests. When the students were forced to sit independently monitored retests, only 14 per cent (46 out of 329) passed and 70 fell well short of the standard required to take their courses.

• READ MORE: Schools warned over suspect students

A former IANZ student approached the Herald to complain - not about the poor education but because he could no longer get a work visa. Asked if he knew about students being given answers, he replied; "The process is the same since they opened.

"You're not a thief until you get caught. People who finished a month before me, they've got their work visas. This is unfair."

Labour's tertiary education spokesman David Cunliffe says the Government has allowed "visa factories" like this to flourish, turning New Zealand into a supermarket for low-grade diplomas which do nothing to solve the country's real skills shortages.

Cunliffe adds that there's nothing wrong in principle with offering students an education and employment package to come here.

"However you would expect the course to be real, the pass rates to be genuine, the students to be real and who they say they are, and the courses offered to be broadly in line with the needs of the economy."

Labour's tertiary education spokesman David Cunliffe says the Government has allowed
Labour's tertiary education spokesman David Cunliffe says the Government has allowed "visa factories" like this to flourish. Photo / Jason Oxenham

Tertiary Education Minister Steven Joyce has defended the system, saying most international students either go home after study or go on to a worthwhile job.

"Most providers do a very good job but there have been a number of providers that have not and NZQA and Immigration NZ are working hard, so they either shape up or ship out."

International education is big business. Last year it collected more than $1 billion in student fees alone and was worth an estimated $4.28 billion, including student spending on living costs. It has become New Zealand's fourth biggest export earner behind tourism, dairy and meat and the Government is aiming for returns of $5 billion by 2026.

Each year almost 100,000 international students pay for tertiary level courses in New Zealand, with two thirds settling in Auckland, where many live and work in the CBD.

Almost half now take low-level diplomas rather than degrees - typically costing about $16,000 for a Diploma of Business at a private training establishment (PTE).

However international education has also been plagued by public scandal for years, including the collapse of the Modern Age language school in 2003, which wrecked the Chinese market for years, and a string of bad practices highlighted by the Herald and other media since 2009.

The current crisis began in 2013 when NZQA allowed many PTEs to do their own English-language testing on prospective students, instead of using external results.

Indian student numbers soared from 12,093 that year to 29,235 last year and visa fraud became rampant. The policy was reversed in October last year but the damage was done.
In the year to June half the student visa applications from India were declined, mainly because of suspected fraud - a far higher rate than for any other country.

An investigation in March by Immigration New Zealand's Mumbai office, which processes all student visas from Indian nationals, found "significant, organised financial document fraud" by agents in the southern city of Hyderabad. The fraud involved a bank loan letter (originally genuine) showing a student had access to funds to pay school fees , which was used fraudulently for other student applications.

The investigation identified 57 agents and 15 corrupt bank branch managers using the scam, which was described in emails as "a significant threat to NZ's education integrity" with possible links to organised crime. Five out of India's 10 biggest agents to New Zealand were involved, three of them extensively, and the overall fraud rate was estimated at 29 per cent.

"The depth and breadth of penetration of this education loan fraud across the Indian student market is rather concerning," wrote INZ risk manager Justin Alves in April. "So far there has been no agent we've looked at which hasn't been using it, to some extent or another."

Student visa applications from India have halved since last year, after the Government introduced a raft of changes, including the restored English test, a code of practice which makes providers liable for their agents' actions, a new English test for immigrants and a higher points threshold for skilled migrants.

But the fallout continues. In 2014 Immigration New Zealand warned the New Zealand Qualifications Authority (NZQA) that a decline rate of 30 percent or more gave "serious cause for concern" about the education provider's quality control or business practices.

Figures supplied to the Herald under the Official Information Act show 58 education providers - including 10 of the country's 16 polytechnics - fell into this category for visas issued from December 1 2015 to September 30 2016.

All but 10 of the education providers listed had decline rates of 50 per cent or more. Decline rates went as high as 100 per cent and eight schools had more than 300 students declined.

On October 31 NZQA deputy chief executive Grant Klinkum and Immigration NZ deputy chief executive Nigel Bickle called 18 institutions who they believed had the most serious problems with high decline rates to a "please explain meeting" at Immigration NZ's Auckland office.

A spokeswoman for Tertiary Education Minister Steven Joyce said the providers shared similarities with IANZ. They were of concern to both agencies and could face stronger monitoring, including unannounced inspections, in future.

Written answers to parliamentary questions by Cunliffe have also established that
Immigration NZ has 13 live investigations into potential student visa fraud at 12 tertiary education organisations (TEOs).

19 PTEs are classified by the Tertiary Education Commission as 'high-risk', with five ongoing Serious Fraud Office investigations and two providers at risk of default.

58 TEOs were investigated for potential probity (honesty) or major education delivery issues by either TEC or NZQA in 2015 (up by 61 per cent from the previous year). There were 46 investigations underway at August 1 this year.

Cunliffe argues that these figures don't even scratch the surface of the real problem, which he puts down a lack of monitoring and enforcement.

"The fact that the number is mushrooming, the fact that the Government's oversight is reactive and slow indicates that the problem is likely to be much worse than the stuff which has already surfaced. It's like a doctor going to a village and finding every 10th patient is sick with a disease but that eight of the other 10 haven't yet had a consultation."

He says NZQA should regularly make unannounced spot checks, instead of giving education providers six weeks notice that inspectors are coming to do a review.

Joyce responds that NZQA now has these powers to use in special circumstances. He strongly rejects claims the agency has been too slow to act, saying it has sometimes been hamstrung by legal action from proprietors.

"There's absolutely no reluctance on the part of either NZQA or Immigration NZ to investigate matters in relation to any provider that's not doing their job and anyone that suggests that is being a bit mischievous."

Darren Conway, chief executive of Languages International, has campaigned for years against dishonest practices in the sector. He says it's obvious that some schools cannot be running an honest operation as their fees are too low to cover the cost of teaching, let alone other overheads.

Conway also wants NZQA to do more unannounced checks on schools' academic work, which would reveal whether students were really handing in their own work.

Opinions are divided over whether most Indian students are victims or knowing accomplices. Dennis Maga, co-ordinator for the migrant workers union Unemig, describes the problem as "education trafficking" - luring students into New Zealand by deception for the fees or commission they bring.

But Conway argues students are often partly responsible for their own plight. For instance, he says, it's relatively easy for desperate Indian students and their families to get around the rule which requires them to show they have $15,000 of living expenses in the bank before they come here.

"The problem is they're cobbling that money together from family and friends, sticking it in the bank and once they get the visa they turn up with no money - which is why they're vulnerable to exploitation."

"It's their way of escaping"

Mandeep Bela says it's obvious Indian students don't come to New Zealand for the high quality of our courses, especially when they have good universities producing doctors and engineers back home.

"The long term goal is to settle in (New Zealand)," says the former international student, who now works for the migrant workers union Unemig.

"Study was only the pathway. Most of the migrants from India have said the same thing to me."

Migrant Workers Association organiser Anu Kaloti. Photo / Supplied
Migrant Workers Association organiser Anu Kaloti. Photo / Supplied

Migrant Workers Association organiser Anu Kaloti agrees. "A lot of the students are not coming here to study or acquire skills, it's their way of escaping," she says.

"There's a lot of inequality in India. There's a lot of corruption and a huge gap between the rich and the poor. It's not as bad as refugees... but it's not that far behind."

She says the young, mainly male Indian students are under huge pressure to gain residency, as their families have often borrowed heavily in the hope that the whole family will one day come here too.

"Parents are investing in their sons and they want a return on their investment. It sounds brutal to say that but it's true."

Unemig co-ordinator Dennis Maga says the big giveaway that international education is really about immigration is that Indian-based education agents send all their students to PTEs - which pay commission fees of up to 50 per cent - but not to our top universities, which pay nothing.

"Why not promote the courses actually being offered by AUT, Auckland University, Victoria and Otago?

"The people benefiting from this are the fly-by-night PTEs that did not even exist 10 years before. A lot of PTEs are popping up like mushrooms right now."

Immigration lawyer Simon Laurent says politicians are still reluctant to license education agents for fear of losing market share.

"A lot of the other countries who are in competition with us don't (license agents) either and they don't want to reduce New Zealand's competitiveness in the international student market.

"We're not first on the list already and they were worried about losing more traction in the market."

The Government and others in the industry argue many bad practices in recent years have involved licensed agents, so the change would not necessarily solve the problem.

International education in NZ

• $1 billion a year in student fees
• $4.28 billion, including student spending on living costs ($2.2 billion a year in Auckland, 2.7% of Auckland's GDP)
• NZ's 4th biggest export earner (behind tourism, dairy and meat)
• Supports 32,000 jobs
• Government target: $5 billion a year by 2026
• 115,875 international fee-paying students in New Zealand,
• 97,950 at tertiary level
• Almost half (43%) take low-value courses at private training establishments (PTEs)

Average annual spending by PTE student:
• $6972 tuition fees
• $22,755 living costs
• $29,727 total

Student visa fraud in India:
• 57 agents and 15 corrupt bank branch managers identified
• 5 out of 10 biggest agents involved
• 29 per cent detected fraud rate

Sources: Education New Zealand, Immigration NZ

Students at Oxford International Academy upset at the loss of their fees after the school was placed in voluntary liquidation in 2012 after producing fake diplomas. Photo / Sarah Ivey
Students at Oxford International Academy upset at the loss of their fees after the school was placed in voluntary liquidation in 2012 after producing fake diplomas. Photo / Sarah Ivey

A troubled history

• 2009:

The New Zealand Academy of Studies is forced to close after it is caught selling a business diploma for $12,000.

• 2010: More than 150 international students gain fraudulent qualifications in less than a year from the API Institute of Education. Almost half pay for qualifications but never attend classes.

• 2010: Massey University's Albany campus has to get rid of about 50 students who enrolled in its business degree with fake diplomas from five local PTEs.

• 2012: Oxford International Academy, one of the schools producing the fake diplomas, is placed in voluntary liquidation in 2012 after NZQA expressed no confidence in the school. NZQA and Immigration take action against four other PTEs over similar issues.

• 2012: Chinese students are found to be in New Zealand on fraudulent visas, implicating 162 students and 24 unnamed local schools.

• 2015: Five institutions aimed mainly at New Zealand students are found to have overcharged taxpayers $25 million. Agribusiness Training Limited in Invercargill collapses in October owing $6.2 million and Masterton's Taratahi Agricultural Training Centre, is overpaid $7.5 million. Investigators cannot find many of the students who signed up for Maori performing arts programmes at Taranaki's Western Institute of Technology.

• 2015: The Serious Fraud Office and the Financial Markets Authority begin investigations into Intueri, which describes itself as the biggest PTE group in New Zealand, over allegations it has overstated student numbers. Intueri makes provision to pay back up to $5m for courses at Quantum Education Group and the NZ School of Outdoor Studies.

(Intueri advises that the FMA has concluded no further action is warranted following a review of Intueri's prospectus. Intueri says it has not made provision for payback of courses to Quantum Group but has provided $1.47 million for the Dive School in relation to historical issues.)

• 2016: The New Zealand International Academy closes months after two staff say they were told to prepare fake results for more than 250 English language tests. Only 14 per cent of the 329 students pass the independent retests.

The series

• Today: Visa and school fraud
• Tomorrow: Student exploitation
• Wednesday: Effect on immigration