The private college that granted Prime Minister Tony Abbott’s daughter a secret $60,000 scholarship is unlikely to pay any money towards a proposed Commonwealth scholarship scheme designed to ensure equitable access to higher education, despite being given access to hundreds of millions of dollars in public funding.

The Commonwealth scholarship scheme is a key plank in the Abbott Government’s plan to deregulate the higher education sector and mandates that, after the cap on course fees is removed, institutions put up to 20 per cent of new revenue towards funding scholarships for students from disadvantaged backgrounds.

However, as New Matilda revealed in September, the majority of private and for profit colleges will avoid putting money towards the scheme because of a loophole exempting institutions with under 500 full time domestic students.

This is despite the fact the legislation will open up a pool of $800 million in public funding to private providers, and see a large sum of government money flow into private hands for the first time.

Among these providers is the Whitehouse Institute of Design, which made headlines in May after being outed for awarding then Opposition Leader Tony Abbott’s daughter Frances with a secret scholarship, a $60,000 bonus unknown to other students and even senior staff at the college.

Mr Abbott has never declared the gift in his parliamentary interests’ register, arguing that the scholarship was awarded “on merit”.

Documents posted on the federal Department of Education’s website reveal that, like many other private organisations, Whitehouse does not currently have enough students to pass the threshold, meaning it will not have to put money towards the scholarship scheme.

The most recent figures available show that in 2013 Whitehouse had the equivalent of 462 full time students.

In 2012 Whitehouse was just over the threshold, with 517 full time students.

Gabriel McDowell, Managing Director of Respublica Public Relations, speaking on behalf of Whitehouse, said the Institute could not currently provide updated 2014 figures.

In response to a question about whether Whitehouse believed it to be fair that private and for-profit providers would likely avoid contributing money to the scholarship scheme even if they gained a significant new source of revenue from government funds, McDowell said the Institute had no comment.

In a submission to the parliamentary inquiry currently examining Christopher Pyne’s higher education changes, the Australian Catholic University raised objections to the fact smaller institutions would be exempt from contributing to the scholarship scheme.

It argued instead that “all providers in receipt of Commonwealth funding through the extension of the demand driven funding system be required to invest a proportion of their additional revenue, or ‘profits’ in the case of private providers, in initiatives that support equity and access objectives.”

Both the Greens and Labor have expressed concern that Pyne’s legislation would effectively exempt many of those private providers from paying money towards the Commonwealth scholarship scheme.

Shadow Minister for Higher Education Kim Carr told New Matilda the government had cut funds to the Tertiary Education Quality Assurance Agency (TEQSA), the Commonwealth regulatory body that oversees the higher education sector, at a time when more money was about to flow to private providers.

“It’s remarkably short-sighted of the government to cut the regulator by 40 per cent to seek to fundamentally narrow its capacities to undertake appropriate audits at the same time as there has been a revelation that number of jurisdictions have been particularly slack in their administration of private providers,” he said.

Greens Senator Lee Rhiannon said she would push the government to explain private contributions to the Commonwealth scholarship scheme in Senate Estimates.

“The proposed Commonwealth scholarship scheme has already been exposed as a sham, as universities will be forced to lift their fees by at least 20 per cent before a single dollar flows into the funding pool,” she said.

Pyne’s changes are currently at the committee stage and seek to create the Commonwealth scholarship scheme while uncapping fees at public universities, effectively increasing the rate of student debt repayments, and cutting Commonwealth funding to universities.

Pyne’s office told New Matilda the exemptions from the scholarship scheme for smaller providers was included after consideration was given to the capacity of private providers to establish and manage the scheme.

“Because of the administrative demands of creating and running such a scheme, it was decided to set a minimum number of students in an institution, public or private, before such an obligation arose,” a spokesperson said.

With Palmer’s senate block standing strong against the changes for now, Pyne may be forced to see the first package go down and then have another crack with some of the measures removed.

Meanwhile, Freya Newman, the University of Technology Sydney student and former Whitehouse Institute staff member accused of leaking information about Frances Abbott’s scholarship, will be sentenced at the Downing Centre Local Court on October 23.

Ms Newman has pled guilty to a charge of illegally accessing a computer (at Whitehouse) and is facing up to two years jail.