Training sites face closure in loans change

Thousands of students will miss out on loans and allowances and scores of private training centres face closure under a Budget initiative.

The heads of up to 50 private training enterprises are meeting today to create a formal lobby group.

They want to challenge the plan, which will axe loans and allowances for students studying for qualifications that don't receive Government subsidies.

The Government says the move, which will save about $20 million over the next four years, is designed to ensure tertiary spending goes to the areas where it can have most impact.

But private training providers say they had no warning and will have to shut their doors if students cannot take a loan to study their courses.

The problem has been exacerbated by the short timeframe, introduced in Finance Minister Michael Cullen's Budget last week. The change comes into effect on January 1.

Brijesh Sethi, director of the NZ School of Education, said his institution ran approved courses for about 400 students.

There had been no consultation and the decision meant he would have to close his doors.

"It's basically the Government deciding what course someone can do and where they can do it."

Up to 50 tertiary education organisations face the threat of closure as they receive no subsidy. About another 90 which offer a mix of funded and unfunded qualifications will also be affected.

The plan targets courses which don't receive "student component funding". But many private providers say they were not given a chance to apply for this, as the deadline was in March.

Ian Wood, who runs a life-coaching school, Leading Edge, said the move was unjust.

His Hamilton-based business has about 80 distance learning students with "about 90 per cent" using the loan scheme. "We are encouraged to take risks and meet the needs of industry and now the Government is cutting us off at the knees," he said.

The Tertiary Education Commission said the Government wanted to prioritise its spending now that student loans are interest-free.

Acting policy and advice group manager James Turner said the commission had to accept that some providers would possibly close.

But the policy change would help students to make informed decisions about selecting tertiary providers and would prevent an "explosion" in the amount of funding.

Education Forum policy adviser Norman LaRocque said the new plan made no sense, disadvantaged students at non-government institutions and was evidence of the Government's anti-private-sector bias.

"If students are willing to pay for their own education, without subsidies, why do we then deny them access to student loans to help them finance that investment?"

While the Government was right to be concerned about quality, it had well-established mechanisms through the Qualifications Authority.

Paul Decker, president of the Association of Private Education Providers, said the decision would have a "devastating" effect.

With only six months until the change, colleges had no chance to plan their future.

"The Government, with one stroke of the pen, has effectively taken out of reach many Qualifications Authority-approved courses."

Students already enrolled on a course running beyond the end of this year will still be able to access loans and allowances for the duration of their studies for their qualification.

GOVERNMENT PLAN

* No more loans or allowances for students at private training centres which don't receive a Government subsidy.

* Will save $20 million over next four years.

* Will ensure tertiary spending is "going to areas where it can have most impact".

* Comes into effect next January 1.

PRIVATE TRAINING CENTRES SAY

* Some will go out of business.

* Timeframe leaves them no chance to prepare.

* Students will lose the right to choose the course they want.

* Government has anti-private-sector bias.