What is a VET Student Loan and how does it work?

VET Student Loans (previously known as VET FEE-HELP) are an Australian government initiative to help students pay their tuition fees when studying vocational education and training (VET) courses.

Although a VET Student Loan (VSL) is a good initiative, there are certain aspects of the scheme that must be understood before going ahead with a government loan.

The most important fact is that VET Student Loans attract a 20% fee, which is added to the course price.

Listen to Ben and Nour discuss the ins and outs of VET Student Loans and why the Australian Paramedical College does not partake in the VET Student Loan scheme – although we do some smarter alternatives.

What you need to know

  • $10,000 is the most anyone can borrow on a VSL.
  • Using the Vet Student Loan (VSL) system, you’re automatically charged a 20% loan fee. $10,000 becomes $12,000.
  • VSL is interest-free. However, the repayment calculations are attached it to the currency index, so in reality, what you pay back can vary.
  • You start paying back the loan through the Australian tax Office as soon as your earnings are above $46,620. (financial year 2020 – 2021)

Video transcript.

Ben: Hi, Ben here from the Australian Paramedical College. Today, I’m talking with Nour, a course adviser from the admissions team at the college. We’re talking VET Student Loan program.

Nour: Yes, we are.

Ben: What is the VET Student Loan program?

Nour: The VET Student Loan program is a tuition option from the government for students who wish to study vocational education training. It replaced the old VET FEE-HELP scheme back in 2017.

Ben: I understand APC doesn’t participate in the program. Can you tell me some of the reasons why?

Nour: Yeah. There’s a number of reasons that we’ve elected not to take part in it. One of the first ones I’ll mention is the loan fee. Regardless of what amount you’re borrowing through the VSL (Vet Student Loan) system, you’re automatically charged a 20% loan fee. If you borrowed 10 grand, you’re automatically in debt for 12 before you’ve even entered a classroom.

Note: There are also limits set to the amount of loan you can apply for. As a benchmark, around $10,000 is the threshold.

Ben: The program is talked about as an interest-free loan. Is that correct?

Nour: Yes, Ben, that’s right. The terminology is correct. It is interest-free. However, what they do is they’ve attached it to the currency index.

What that means is, dependent on how the Australian dollar performs in the global market, the loan will increase either by a little bit or a lot each annum (every year) based on how the dollar is performing.

Ben: Okay. How does that disadvantage a student?

Nour: Well, you can’t control it, obviously. It means you don’t know how it’s (the currency index) increasing. If you have interest, at least you can calculate how that’s increasing each year.

Additionally, because the payback system works on a threshold. You’re not paying it back for years until you reach that income threshold.

While it’s sitting there, not having interest attached, but it is increasing annually at an amount that you can’t control. Until you start earning that threshold, you’re not paying it back, it really could grow quite substantially without you controlling it.

Ben: If a student wants to participate in the VET loan program, what does it mean for them then wanting to go on to university?

Nour: That’s really one of the big reasons that we’ve chosen to stay away from it. Most of our students use the Diploma of Paramedical Science as a pathway into university to get their bachelor degree.

What that means is they’re going to leave us with a VET student loan of whatever it may be. You’re going to go into uni, add a HECS debt (Higher Education Contribution Scheme) to that.

By the time they finished, their debt (could be) almost a hundred thousand dollars; and that’s a lot of debt for someone who’s young entering the industry.

Ben: Okay, so for those reasons, APC had chosen not to participate in the program. Are there any other options for students?

Nour: Yes. We have a number of different alternative payment options that our students can use to cover their tuition fees. If anyone wants more information about those options, they can reach out to the admissions team here at the college.

Ben: Wonderful. Thanks so much, Nour.

Nour: Pleasure. Thank you.

The Australian Paramedical College is the largest prehospital emergency health care training provider in Australia.

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