The government is planning an overhaul of the way vocational loans work, but representatives from the sector say the proposed changes are flawed and will result in at least half a million young Australians missing out on the chance to develop their skills.

The planned cuts to the taxpayer-funded loan system could even result in widespread job losses, they warn.

Private vocational trainers are not denying that the system needs reform, but want the government to re-think what they believe is a flawed proposal.

The Australian Council for Private Education and Training has spoken up about cuts to the number of courses that will be eligible for loans (the plans are to slash these from 825 to about 350), saying there wasn’t sufficient consultation carried out on the matter.

“This wholesale removal of courses leaves few, if any, options for many students to gain support to obtain qualifications and pursue careers in fields of education that are likely to provide the ‘future of work’ as Australia’s services sector economy develops,” remarks the council in its submission to a parliamentary inquiry that’s taking place to investigate the changes.

And as for a proposed ban on subcontracting course delivery without government approval, the council says it is “ an extreme invasion into the management practices of business and will result in overwhelming red tape”.

The government is also planning to cap loans at either $5,000, $10,000 or $15,000 according to what they think the course should cost to deliver. But private providers have criticised this also, calling it a “simplistic tool” and saying the result will be that trainers cut the quality of expensive courses or do away with them altogether.

TAFE directors have expressed similar concerns, saying that if less money is available, course providers will just make them cheaper to run by compromising on quality.

“The proposed registration criteria for the VET Student Loans Scheme will not necessarily exclude bad providers, who will merely adjust their quality down to the meet the funds on offer,” TAFE Directors Australia says in its submission to the inquiry.

They argue that TAFEs should not be subject to the loan caps and restrictions on eligible courses since their institutions are regarded as on a par with universities in the community but are much more heavily governed.

“TAFE students have not been the cause of the VET FEE-HELP (loan scheme) expenditure blowout nor is there a likelihood of such occurring in the future,” the directors say.

Other bodies contributing to the committee inquiry in Melbourne include the consumer watchdog, the National Tertiary Education Union, the vocational sector’s regulator and the federal education department.