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Mechanisms or muddle? What to make of AQF 5-6

This article examines Australian Qualification Framework (AQF) levels 5-6 and the overlap between vocational education and training (VET) Diploma and above and higher education (HE) Sub-bachelor courses. It follows an earlier paper on the boundaries and connections between the VET and HE sectors.

The ambitious questions being asked are: what is the quantum of private investment, public subsidy and financing by all governments (including longer-term costs to government of any unpaid loans) both sides of the VET/HE AQF 5/6 ‘divide’; does choice of course and costs drive student behaviour; and what are the educational, skills and employment benefits to students and employers? These are important policy questions as well as being relevant to employers who expect both discipline knowledge and technical skills in graduates they employ. It is also the junction point with pathways between the sectors.

Whilst the explanations below fall short of this ambition, current evidence and pertinent issues are summarised. A full version of this article is available including source data, figures and analysis.

Summary findings AQF 5-6

Enrolment Numbers and Fields of Education

Although total enrolments in publicly funded/financed AQF 5/6 VET Diplomas and above are greater in number than AQF 5/6 HE Sub-bachelor enrolments, recent trends show VET Diplomas in sharp decline, with the close of VET FEE HELP and tight controls on courses/costs/providers under the VET Student Loans program. Whilst domestic enrolments in VET Diplomas are sharply declining, international enrolments in VET Diplomas are increasing, being near half of all international VET enrolments with the majority from China and with most students intending to go on to HE study.

There is evidence of sustained yet modest growth in domestic HE Sub-bachelor enrolments with enrolments in 2016 of similar but less number to those reported under VET Student Loans for 2017.

HE and VET AQF 5/6 providers similarly promote the educational and work-skill benefits of their courses. There are overlaps in enrolments by Field of Education (FoE). ‘Management and commerce’ and ‘society and culture’ dominate in both HE (Associate degree, Diplomas) and VET enrolments (Diploma and above). ‘Health’ (e.g. nursing), ‘education’ and ‘creative arts’ shows the next highest enrolments and overlaps. ‘Natural sciences’ dominate in HE enrolments whilst ‘food hospitality and personal services’ is near exclusive to VET.

Student Views and Surveys

Evidence from graduate surveys shows firmer distinctions in students’ reasons for study. VET Diploma students state work-related reasons for subject enrolments (‘get a better job’, ‘needed for work’, ‘get promoted’) and as graduates generally rate work benefits of VET training higher than HE Diploma graduates. VET Diplomas (AQF 5) are built more overtly for vocational purposes.

HE Diploma graduates by contrast tend to see their qualification as less relevant to employment rather providing pathways to higher academic learning, or other professional pursuits such as foreign languages.

That said students use both VET and HE AQF 5/6 courses as effective pathways to higher AQF studies.

Institutional promotion and marketing

The overall pitch and rhetoric by universities in presenting benefits of Sub-bachelor programs are much the same as those long espoused by VET providers. Universities have greater marketing power in offering Sub-bachelor courses compared with training providers offering VET Diplomas in similar FoE. This is for reasons of perceived prestige and pathways which in some cases lead into the second year of Bachelor degree study. Universities also have the ability to ‘self-accredit’ courses and have preferred funding/financing arrangements.

Some thirty-six institutions were identified as straddling the VET/HE boundary: that is, registered as both HE provider and approved VET Student Loan provider. These institutions comprised twelve universities (including dual sector) and eleven TAFEs.

Collaboration and pathways

Where there are student pathways straddling VET and HE AQF 5/6, these typically have been cooperatively negotiated ‘ground up’ between institutions, not facilitated by national policy ‘top down’. Examples of collaborative local and regional solutions take time and resources to create.

Where universities (dual sector or their colleges) are approved as VET Student Loan providers and have grant contracts for HE Sub-bachelor ‘designated places’, they have the potential benefit of two student entry pathways, both at AQF 5/6, and can also decide requirements for student entry into AQF 7 levels.  Universities also have access to HEPPP funding to improve access by students from low SES backgrounds.

Public funding and financing - VET

Public funding and financing of VET AQF 5/6 courses is complex, being the sum of (unknown) state/territory government subsidies of VET Diplomas and higher-level VET qualifications as well as Australian government-financed VET Student Loans (some with state/territory subsidy), plus the uncertain future costs to governments of any unpaid loans.

The amount paid to course providers in respect of VET Student Loans approved for students studying eligible courses in 2017 was just over $200 million (full-year 2017).  Of the 211 approved course providers (at May 2018) some 155 providers had students who accessed a VET Student Loan in 2017 with there being in total 42,220 loan-assisted students.

Students may enrol on a full-fee-for-service basis and trigger a 20 per cent loan fee if they borrow for such a purpose. If their enrolment is (minimally) subsidised by a state or territory government there is no loan fee, but conversely were a student’s employer to pay such a subsidy, a loan fee still applies.

VET Diploma enrolments subsidised by states and territories are (at present) far greater in number than those of VET Student Loans. There is strong overlap in the popular state funded and VET Student Loan courses, so in future states have the option to direct Diploma students to approved VET Student Loan providers and withdraw, or minimise any state subsidies sufficient so students avoid the 20% loan fee.

Public funding and financing - HE

By comparison the Australian government in 2018 provided thirty-six universities with a total of about $205 million in grants for HE AQF 5/6 Sub-bachelor courses, in addition to which students pay a capped fee that can be financed by HELP loans, with again-long term uncertain cost to government of any loans not repaid. The $205 million was for a total of 18,847 ‘designated places’.

Students if enrolled fee for service at an HE provider may choose to access a HELP loan for which a 25% loan fee applies if the provider is eligible to provide such loans.

Proposed AQF 5-6 national policy was rebuffed and alternate policy adopted

Proposed policy to extend the HE ‘demand driven’ system to HE Sub-bachelor programs was not pursued. It was strongly supported by the HE sector but equally strongly opposed within the VET sector.

From 2019 the Australian government intends to support Sub-bachelor courses that focus on industry needs that fully articulate into a Bachelor degree. An unresolved issue for universities is interpreting ‘industry needs’ and ‘full articulation’ for Sub-bachelor courses. Some HE Diplomas are designed academically to provide pathways into higher HE qualifications with no direct industry need.

International perspective – one view about the UK experience

This contested ground is similar to that described in the United Kingdom, where one commentator holds the strong view that UK universities have ‘colonised’ the upper levels of their vocational training system, this distortion resulting through power of finances, prestige and marketing.

‘[U]niversities are thus well placed to expand their recruitment and the range of their offerings, colonising areas of vocational education and training which were traditionally the preserve of apprenticeship or of vocational schools and colleges. One policy option is simply to accept this: everyone should go to university, and all training should simply take place there. It is a bad option – financially and substantively’. 

There is argument to tilt Britain’s education system back towards skills training.

Summary observations AQF 5-6


In Australia VET/HE AQF 5/6 qualifications and their ‘boundary’ space presently operate under separate legislative, funding/financing and regulatory regimes, including different accreditation paths for courses and qualifications, and with separate public administrative costs.

Whilst there are present overlaps in FoE and courses across the HE/VET AQF 5/6 levels (for example nursing), any future convergence of popular courses and greater competition for students; or alternately, course differentiation providing complementary purposes, pathways and job-specific outcomes, will mostly depend on student choice influenced by policy, funding and financing.

Present policy and funding arrangements appear to tilt student choice to the HE track. Student eligibility and funding/financing policy is critical, as any inequity in opportunity or support (such as loan fees) risks students enrolling in courses not because of educational/training benefits that best suit them, but because they perceive them as financially more favourable.

The Australian government has two funding/finance programs supporting AQF 5/6 qualifications either side of the VET/HE boundary: training loans for students enrolled with approved providers in legislatively specified VET AQF 5/6 courses, with notionally unlimited places; and, grant funded places at universities that are quota-limited and include specified capped student fees that are coverable by loans, for students enrolled in HE AQF 5/6 courses. There are parallel administrative costs, including $36 million in IT systems and support for VET Student Loan compliance.

States and territories provide subsidies for VET AQF 5-6 programs but costs are unknown, as is longer-term costs to governments of unpaid loans for VET or HE courses. This leaves the picture incomplete.


Education futurists point to the disruption of internet-empowered education interlopers, offering global reach in digital learning and corporate packaging of industry-endorsed ‘just when needed’ learning. This is forecast to impact on existing HE and VET providers. Such change may not of itself be damaging to high quality, timely skills formation in the workforce, provided for example ‘micro-credentials’ are supplementary and not alternatives displacing full qualifications.

Solutions may focus on qualification pathways spanning VET/HE that have a clear line of sight from training/education to occupational needs. This presents opportunity for intermediary stand-alone qualifications, supplemented by skill sets and/or ’micro-credentials’, aligned to evolving and emerging jobs, as well as tiered-levels of professional qualifications supporting job progression. This may work best with vocationally-specific qualifications in fields such as engineering, design, architecture, IT technologies, management/finance, nursing, etc. and linked to professional registrations and credentials. It would also better facilitate higher apprentices at VET/HE AQF 5-6 levels and above.

Fresh approaches may be needed in best joint practice in pedagogy, combining knowledge/skill teaching and assessment supported by a stable continuum of public funding/financing designed to support a better integrated tertiary education system. From the perspective of students, the ability to pick and mix the best from university education and vocational training, be it skilling, academic study or work experience should improve job prospects for students and better meet needs of employers.

The announced review of HE provider category standards may lead to institutional reforms (perhaps even re-defining ‘university’).  A separate review of the AQF has commenced. Pre-research for this review notes “ambiguities in having different qualifications on the same (AQF) level, but also about differentiation of student support payments for the same qualification dependent upon its classification as ‘VET’ or ‘HE’ [and] ‘while funding and support payments may sit outside the sphere of influence of the AQF they nevertheless potentially promote powerful distortions in the marketplace for qualifications which is a core concern for the AQF”.  Both reviews are pertinent to potentially laying the groundwork for future reforms at AQF 5-6 levels.

Dr Craig Fowler is an analyst and observer of national policies impacting tertiary education, science and innovation after decades of experience in private, public and university sectors.

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