EXPLANATORY STATEMENT
Issued by the authority of the VSL Tuition Protection Director
VET Student Loans (VSL Tuition Protection Levy) Act 2020
VET Student Loans (VSL Tuition Protection Levy) (Risk Rated Premium and Special Tuition Protection Components) Determination 2026
AUTHORITY
Section 13 of the VET Student Loans (VSL Tuition Protection Levy) Act 2020 (the Act) provides that, before 1 August of each year, the VSL Tuition Protection Director (the Director) must, by legislative instrument, determine the matters set out in section 13 of the Act for the purposes of sections 11 and 12 of the Act. Such matters relate to the calculation of the Risk Rated Premium component and Special Tuition Protection component of the VSL tuition protection levy (the Levy) for the year.
In making an instrument under section 13, the Director must have regard to any advice of the VSL Tuition Protection Fund Advisory Board (the Board) and the sustainability of the VSL Tuition Protection Fund (the Fund) (subsection 13(4) of the Act). The Director may also have regard to any other matter that the Director considers appropriate (subsection 13(5) of the Act). Subsection 13(6) of the Act also provides that the Treasurer must approve the instrument in writing before it is made by the Director.
Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by‑laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument. The repeal of the VET Student Loans (VSL Tuition Protection Levy) (Risk Rated Premium and Special Tuition Protection Components) Determination 2025 (the Former Instrument) at Schedule 1 to the VET Student Loans (VSL Tuition Protection Levy) (Risk Rated Premium and Special Tuition Protection Components) Determination 2026 (the Instrument) is made in reliance on this power.
PURPOSE AND OPERATION
The purpose of the Instrument is to determine various matters relevant to the calculation of the Risk Rated Premium component and Special Tuition Protection component of the Levy for the 2026 calendar year.
The Risk Rated Premium component ensures that a leviable provider’s risk of default (meaning the risk of a provider failing to start to provide, or ceasing to provide, a unit of study for a student) is reflected in the amount of Levy payable by that provider and ensures providers are financially incentivised to reduce their risk of defaulting. The Special Tuition Protection component of the Levy ensures that the Fund builds to a sufficient balance.
The Levy is imposed under section 6 of the Act on all leviable providers (as defined in section 5 of the Act) and provides an industry contribution towards the costs of tuition protection for students with a VET student loan. The Levy is payable into the Fund, which is established under section 66J of the VET Student Loans Act 2016 (VSL Act) and managed by the Director.
The Director is accountable for the appropriate and sustainable management of the Fund. The Instrument assists the Director in exercising their functions under the VSL Act by maintaining a high level of student protection and ensuring sufficient funds are held in the Fund to place students in a suitable replacement course or re-credit their VSL balance in the event of provider defaults.
Adjustments to the Calculation of the Levy
The Instrument is largely consistent with the Former Instrument, such that the calculation of the Risk Rated Premium component of the Levy for the 2026 calendar year largely reflects the calculation of the Levy for the 2025 calendar year. There is no change to the calculation of the financial strength risk factor, completion rate risk factor and non-compliance history and registration renewal risk factor. The Board and the Australian Government Actuary (AGA) agreed that the model for each risk factor should remain unchanged.
This Instrument lowers the percentage used to calculate the Special Tuition Protection component of the Levy from 0.1 per cent, for the purposes of the Former Instrument, to 0 per cent, meaning that there will be no Special Tuition Protection component of the Levy payable by leviable providers. This change was recommended by the AGA and the Board, and agreed to by the Director, having regard to the sustainability of the Fund.
FINANCIAL IMPACT STATEMENT
The Instrument will result in projected revenue, from the Risk Rated Premium component of the VSL Levy only, of approximately $0.838 million.
Given the Levy amounts are credited to the Fund, and are derived from industry contributions, the amount in the Fund cannot be directed toward any other program or portfolio, as it can only be appropriated for the purposes of the Fund.
In determining the matters relevant to the calculation of the Risk Rated Premium component and Special Tuition Protection components of the VSL Levy, the Director has considered not only the sustainability of the Fund, but also the impact of current economic conditions on businesses and education in Australia. The Director’s focus and intention in determining those matters was on supporting students and Australian businesses.
COMMENCEMENT
Parts 1 to 3 of the Instrument commence on 31 July 2026, and Schedule 1 of the Instrument which repeals the Former Instrument, commences on 1 August 2026.
CONSULTATION
Advice from the Board
Under subsection 13(4) of the Act, in making an instrument, the Director must have regard to any advice of the Board in relation to the Instrument, and the sustainability of the Fund. In making the Instrument, the Director has accepted the Board’s advice. The Board’s final advice was published on the TPS website (www.education.gov.au/tps/resources/final-board-advice-2026-vsl-tuition-protection-levy-settings) on 27 May 2026.
Consultation with providers and peak bodies
The Director engaged with leviable education and training providers, policy agencies and peak bodies around Australia through online and in-person consultation sessions on the 2026 Levy settings in March and April this year. The purpose of the consultation sessions was to share general information about the Levy, present the 2026 draft Levy settings as proposed by the Board, and collect feedback from the sector on the settings. A feedback webinar was held on the 22 April 2026 to give feedback on the consultation period. Further, consultation involved three in-person sessions, across New South Wales, Queensland, and Victoria, with a further online consultation webinar for providers in Western Australia, the Northern Territory, South Australia, Tasmania, and the Australian Capital Territory.
The TPS Director consulted with the following peak bodies during the consultation period:
- TAFE Directors Australia
- Independent Higher Education Australia
- Independent Tertiary Education Council Australia
The majority of leviable education and training providers, and peak bodies, were satisfied with the proposed settings for the 2026 Levy.
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
VET Student Loans (VSL Tuition Protection Levy) (Risk Rated Premium and Special Tuition Protection Components) Determination 2026
The VET Student Loans (VSL Tuition Protection Levy) (Risk Rated Premium and Special Tuition Protection Components) Determination 2026 (the Instrument) is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
The purpose of the Instrument is to determine various matters relevant to the calculation of the Risk Rated Premium component and Special Tuition Protection component of the Levy for the 2026 calendar year.
The Risk Rated Premium component ensures that a leviable provider’s risk of default (meaning the risk of a provider failing to start to provide, or ceasing to provide, a unit of study for a student) is reflected in the amount of Levy payable by that provider and ensures providers are financially incentivised to reduce their risk of defaulting. The Special Tuition Protection component of the Levy ensures that the Fund builds to a sufficient balance.
The Levy is imposed under section 6 of the Act on all leviable providers (as defined in section 5 of the Act) and provides an industry contribution towards the costs of tuition protection for students with a VET student loan. The Levy is payable into the Fund, which is established under section 66J of the VET Student Loans Act 2016 (the VSL Act) and managed by the Director.
The Director is accountable for the appropriate and sustainable management of the Fund. The Instrument assists the Director in exercising their functions under the VSL Act by maintaining a high level of student protection and ensuring sufficient funds are held in the Fund to place students in a suitable replacement course or re-credit their VSL balance in the event of provider defaults.
Adjustments to the Calculation of the Levy
The Instrument is largely consistent with the VET Student Loans (VSL Tuition Protection Levy) (Risk Rated Premium and Special Tuition Protection Components) Determination 2025 (the Former Instrument), such that the calculation of the Risk Rated Premium component of the Levy for the 2026 calendar year largely reflects the calculation of the Levy for the 2025 calendar year. There is no change to the calculation of the financial strength risk factor, completion rate risk factor and non-compliance history and registration renewal risk factor. The Board and the Australian Government Actuary (AGA) agreed that the model for each risk factor should remain unchanged.
The Instrument lowers the percentage used to calculate the Special Tuition Protection component of the Levy from 0.1 per cent, for the purposes of the Former Instrument, to 0 per cent, meaning that there will be no Special Tuition Protection component of the Levy payable by leviable providers. This change was recommended by the AGA and the Board, and agreed to by the Director, having regard to the sustainability of the Fund.
Human rights implications
Right to education
The Instrument engages Article 13(2)(c) of the International Covenant on Economic, Social and Cultural Rights (ICESCR) which provides that ‘higher education shall be made equally accessible to all, on the basis of capacity, by every appropriate means, and in particular by the progressive introduction of free education’.
The Instrument is part of the broader VSL tuition protection scheme (the Scheme) set out in Part 5A and Part 5B of the VET Student Loans Act 2016. The Scheme’s aim is to ensure students accessing VET student loans are protected and supported in the event that their approved course provider defaults (meaning the provider fails to start to provide, or ceases to provide, a course or part of a course) by either providing a suitable replacement course or re-credit to their VET student loan balance.
The Instrument determines various matters relevant to the calculation of the Risk Rated Premium component and Special Tuition Protection component of the VSL Levy for the 2026 calendar year.
The Risk Rated Premium component ensures that a leviable provider’s risk of default is reflected in the amount of VSL Levy payable by that provider and ensures providers are financially incentivised to reduce their risk of defaulting. The Special Tuition Protection component of the VSL Levy ensures that the Fund builds to a sufficient balance.
Therefore, the Instrument will ensure that sufficient funds are held in the Fund to cover the ongoing costs of providing tuition protection for students with a VET student loan, thereby maintaining a high level of student protection in the event a course provider is no longer able to deliver a course. The Instrument is compatible with and will enhance the right to education by ensuring that there are appropriately funded tuition protection arrangements in place for VET students.
Conclusion
The Instrument is compatible with human rights because it supports the right to education, and in so doing advances the protection of human rights.
Acting VSL Tuition Protection Director, Katherine Tagg
VET STUDENT LOANS (VSL TUITION PROTECTION LEVY) (RISK RATED PREMIUM AND SPECIAL TUITION PROTECTION COMPONENTS) DETERMINATION 2026
EXPLANATION OF PROVISIONS
PART 1 – INTRODUCTION
Section 1: Name
1. This section specifies the name of the instrument as the VET Student Loans (VSL Tuition Protection Levy) (Risk Rated Premium and Special Tuition Protection Components) Determination 2026 (the Instrument).
Section 2: Commencement
2. This section sets out the commencement dates of the Instrument. Parts 1 to 3 of the Instrument commence on 31 July 2026 and Schedule 1 of the Instrument, which repeals the VET Student Loans (VSL Tuition Protection Levy) (Risk Rated Premium and Special Tuition Protection Components) Determination 2025 (the Former Instrument), commences on 1 August 2026.
Section 3: Authority
3. This section provides that the Instrument is made by the VSL Tuition Protection Director (the Director) under section 13 of the VET Student Loans (VSL Tuition Protection Levy) Act 2020 (the Act).
4. In accordance with subsection 13(6) of the Act, the Treasurer has approved the Instrument.
Section 4: Definitions
5. This section defines a range of terms that are used in the Instrument and notes that some terms used in the Instrument are defined in section 5 of the Act (and have the same meaning as in the Act).
6. In particular, ‘financial statement’ means the general purpose financial statement given by a leviable provider to the Secretary in accordance with section 52 of the VET Student Loans Act 2016 and section 113 of the VET Student Loans Rules 2016 for the financial year ending on a date in 2025. Under subsection 113(2) of the VET Student Loans Rules 2016, the financial statements must be prepared by a qualified accountant and audited by a qualified auditor who is independent of the provider. This term is used in section 7 of the Instrument and is relevant to the determination of the risk factor value for the financial strength risk factor for a leviable provider.
7. ‘Statement of general information’ means statements of information or documents provided by a leviable provider to the Secretary in accordance with a notice under section 53 of the VET Student Loans Act 2016. This term is used in section 8 of the Instrument and is relevant to the determination of the risk factor value for the completion rate risk factor for a leviable provider.
8. ‘Risk management purposes’ is defined for the purposes of item 5 of the table in subsection 9(1) of the Instrument. That item provides that a risk factor of 1.0 applies to a leviable provider where the provider applies for renewal of its registration and, for risk management purposes, receives a renewed registration period that is less than the maximum allowed under the relevant legislation. The definition for risk management purposes makes it clear that this risk factor will only be applied to a leviable provider that receives a shorter renewal period due to their risk profile, rather than for other reasons. A note beneath the definition for ‘risk management purposes’ provides an example of when that increased factor would not apply, being where a leviable provider is required to re-register because of a change to its name but the existing registration end date is retained.
Section 5: Schedules
9. This section specifies that Schedule 1 is effective on its terms to repeal the Former Instrument.
PART 2 – RISK RATED PREMIUM COMPONENT
Section 6: Risk Rated Premium component
10. Section 6 provides amounts, percentages and risk factors relevant for determining a leviable provider’s Risk Rated Premium component under subsection 11(2) of the Act.
11. Subsection 6(1) provides that the amount for the purposes of step 1 of the method statement in subsection 11(2) of the Act is $6.00.
12. Subsection 6(2) provides that the percentage for the purposes of step 2 of the method statement in subsection 11(2) of the Act is 0.13 per cent.
13. Subsection 6(3) provides that the risk factors that are specified for the purposes of step 4 of the method statement in subsection 11(2) of the Act are the financial strength risk factor, the completion rate risk factor and the non-compliance history and registration renewal risk factor.
14. Subsection 13(3) of the Act provides that a risk factor value for a risk factor must be a number between zero and 10 (inclusive). As set out below, the possible risk factor values for all the specified risk factors fall within this range.
Section 7: Risk factor – financial strength
15. Section 7 of the Instrument provides the method of calculating the financial strength risk factor value for the provider, for the purposes of step 4 of the method statement in subsection 11(2) of the Act.
16. Subsection 7(1) provides that the risk factor value for the financial strength risk factor for a leviable provider is 2.5 if the provider did not submit its financial statement (unless the provider was not required to submit a financial statement); 0.0 if the provider was not required to submit a financial statement; and as set out in the table in subsection 7(1) if the provider submitted its financial statement.
17. The table in subsection 7(1) provides that the risk factor value for a leviable provider that submitted a financial statement is 0.0 if the financial strength score of the provider (as determined under subsections 7(2) and (3)) is 9; 1.0 if the financial strength score of the provider is 6 or 7.5; and 2.0 if the financial strength score of the provider is 3 or 4.5.
18. Subsections 7(2) and 7(3) provide the method for determining a leviable provider’s financial strength score, which is relevant for determining the financial strength risk factor value for a leviable provider. Subsection (2) provides that a leviable provider’s financial strength score is the sum of the return on assets score and debt to equity score. The table in subsection (3) sets out the formulas for calculating each score, with the relevant information for those formulas being taken or derived from the provider’s financial statements.
Section 8: Risk factor – completion rate
19. Section 8 of the Instrument provides the method of calculating the completion rate risk factor value for the provider, for the purposes of step 4 of the method statement in subsection 11(2) of the Act.
20. Subsection 8(1) provides that the risk factor value for the completion rate risk factor for a leviable provider is zero if the provider did not report any units of study for the calendar year beginning on 1 January 2025 (previous calendar year) in its statement of general information. For example, the provider may not have delivered any units of study in 2025 and therefore, there were no units to report. If the provider did report units of study for the previous calendar year, the risk factor value will depend on the provider’s completion rate percentage (as set out in the table in subsection 8(1)).
21. The table in subsection 8(1) provides that the risk factor value for a leviable provider is 0.0 if its completion rate percentage (as determined under subsection 8(2)) is 85% or more; 1.0 if its completion rate percentage is 60% or more but less than 85%; 2.5 if its completion rate percentage is 35% or more but less than 60%; and 3.5 if its completion rate percentage is 0% or more but less than 35%. The risk factor values for leviable providers have remained the same from 2025 which reflects the advice of the Australian Government Actuary and the TPS Advisory Board.
22. Subsection 8(2) provides a formula for calculating a leviable provider’s completion rate percentage, which is relevant for determining the completion rate risk factor value for a leviable provider. The leviable provider’s completion rate percentage will be calculated by reference to data reported by the provider in its statement of general information (as defined in section 4 of the Instrument).
Section 9: Risk factor – non-compliance history and registration renewal
23. Section 9 of the Instrument provides the method of calculating the non-compliance history and registration renewal risk factor value for a leviable provider, for the purposes of step 4 of the method statement in subsection 11(2) of the Act.
24. As set out in the table in subsection 9(1) of the Instrument, the risk factor value will depend on the provider’s weighted late payment measure, which is worked out (for 2023, 2024 and 2025) in accordance with the calculations set out in subsection 9(3). A provider’s weighted late payment measure is worked out by reference to the number of days after the due date on which the approved course provider charge and VSL tuition protection levy for each specified year were received (respectively, the ‘VSLPC’ and ‘VSLTPL’ components of the calculations set out in subsection 9(3)). Both the approved course provider charge and VSL tuition protection levy were imposed in 2023, 2024 and 2025 so the ‘VSLPC’ and ‘VSLTPL’ components feature in all weighted late payment measure calculations for those years.
25. In accordance with item 5 of the table in subsection 9(1) of the Instrument, the risk factor also depends on whether:
• the provider has applied for renewal of its registration;
• the period of registration set out in the most recent notice given to the provider, or as most recently updated on the National Register, was less than the maximum period permitted under the relevant legislation; and
• the Department has been advised that the decision to impose a shorter period of registration was made for ‘risk management purposes’.
26. Where the decision to impose a shorter registration period was made for ‘risk management purposes’, the increase factor in item 5 of the table in subsection 9(1) will apply for the duration of the shorter registration period and/or until the leviable provider applies for renewal of its registration and is granted either:
• the maximum period allowable under the relevant legislation; or
• a shorter period, but for reasons other than ‘risk management purposes’.
27. Depending on the circumstances and location of the provider, the duration of a provider’s registration is contingent on decisions made under the National Vocational Education and Training Regulator Act 2011 (maximum period seven years); the Education Training and Reform Act 2006 (Vic) (maximum period five years); or the Vocational Education and Training (General) Regulations 2009 (WA) (maximum period seven years). It is an ongoing requirement for approved course providers under subsection 25(2) of the VET Student Loans Act 2016 to be registered training organisations. This term has the same meaning as in the National Vocational Education and Training Regulator Act 2011 which means a training organisation is listed on the National Register as a registered training organisation.
28. Subsection 9(2) of the Instrument provides that when more than one item in the table at subsection 9(1) applies, the risk factor value for the non-compliance and registration renewal risk factor is the sum of the applicable risk factor values in column 3 of the table at subsection 9(1). For example, if a leviable provider has a weighted late payment measure of 30 days or more and its registration under the National Vocational Education and Training Regulator Act 2011 was renewed for a period of four years, the provider’s risk factor value would be 3.0.
29. Subsection 9(3) provides the method for determining a leviable provider’s weighted late payment measure, which is relevant for determining the non-compliance and registration renewal risk factor value for a leviable provider.
PART 3 – SPECIAL TUITION PROTECTION COMPONENT
Section 10: Special Tuition Protection component
30. Subsection 12(2) of the Act deals with the Special Tuition Protection component of the Levy for all leviable providers, except new providers, which are dealt with under subsection 12(1) and for whom the component is set at zero. Subsection 12(2) provides that a leviable provider’s Special Tuition Protection component is the total loan amounts paid to the provider under section 19 of the VET Student Loans Act 2016 for the previous year, multiplied by the percentage determined in an instrument made under section 13 of the Act for the purposes of subsection 12(2) for the year.
31. Section 10 specifies that the percentage for the purposes of subsection 12(2) of the Act is 0.0%. This means that the Levy calculated in accordance with the Instrument will not include a Special Tuition Protection component.
SCHEDULE 1 – REPEALS
Item 1
32. Item 1 repeals the Former Instrument, from 1 August 2026