The federal government has introduced new laws designed to clamp down on the dodgy private colleges that have proliferated throughout the country.

The legislation will allow the government to create quality standards at short notice, force unethical marketers to identify which registered training organisation (RTO) is providing the course and extend the registration period for compliant colleges from five to seven years to better target audits to "high-risk" providers.

The move comes after assistant minister for education and training Simon Birmingham announced that the Australian Skills Quality Authority (ASQA) would investigate 23 vocational educational institutions after widespread allegations of students being tricked into signing up for courses.

NSW has the highest number of training organisations under investigation in the country, it is also the largest training market in Australia with more than 2000 RTOs operating in the state.

Last week, the NSW Department of Fair Trading revealed that at least 600 students were deceived into taking out loans for courses after unscrupulous operators offered potential students "end-of-financial-year discounts", laptops or iPads as inducements to sign up for the programs.

Courses can cost from  $10,000 for a diploma of school age education and care, to $19,000 for a diploma of electronics and communications engineering. While students rack up thousands of dollars in debt, taxpayers are also being hit, with loans being taken out through the federal government's VET FEE-HELP program.

Seven NSW institutions are being audited by the regulator after complaints were received of students being overcharged and offered false promises of work placements. Six Queensland and Victorian institutions are also being targeted.

"Any training providers found to be engaged in practices that are contrary to the required national standards could face regulatory sanctions, including the cancellation or suspension of their registration," Senator Birmingham said.

Since 2011, ASQA has refused 15.6 per cent of applications nationwide to set up a new private college, while 6.1 per cent of applications to re-register an existing RTO have been denied.

The sector has boomed since the government opened up public funding to the private sector.

In Victoria, the RTO market made at least $230 million profit in 2013, a University of Sydney report shows.

NSW Education Minister Adrian Piccoli said the NSW and Victorian markets were different. Mr Piccoli said  the cap on fees and enrolments for subsidised places in NSW meant the competition was on quality.

He also said he supported the government's move to crack down on dodgy practices.

"We welcome any moves by the Commonwealth to lift standards and to tackle unscrupulous practices."

ASQA chief commissioner Christopher Robinson said while most training organisations provided useful skills, those that did not meet the required standards would have the book thrown at  them.

"Registered training organisations are required to provide students with information including any VET FEE-HELP, government-funded subsidy or other financial support arrangements and any obligations to repay any debt incurred,"  Mr Robinson said.

Those businesses that breach fair-trading laws face penalties up to $1.1 million.

 

The private college debate
Private colleges: are they strangled by red tape or in need of more regulation? And can their quality be trusted? Labor frontbencher Amanda Rishworth and Liberal MP Wyatt Roy weigh in.

NSW Fair Trading Minister Matthew Mason-Cox said the department had launched its own investigation into the conduct of some of the operators.

"We are also running an education campaign that reminds consumers of what they should look out for when signing up to training courses and how to ensure they are studying with a quality training provider," he said.

He urged those considering signing up to courses to carefully check the contract details, cancellation fees and their refund policies, and to not be duped by incentives such as iPads.

With Anna Patty and Amy McNeilage