AIPE has gone into voluntary administration. Credit:Virginia Star The design of the current scheme is already being used by bodies such as the Productivity Commission as a textbook example of public policy failure. Senator Birmingham said the new scheme - to be known as VET Student Loans - would end the rorts and rip-offs that flourished under VET FEE-HELP. "The waste and rorting and damage to vocational education simply cannot continue," he said. "It is clear that a completely new program is essential to weed out the rorters and restore credibility to vocational education and training."

Under the redesigned system, colleges will have to go through a rigorous application process to become eligible and will then be subject to extensive monitoring. Relationships with industry, student completion rates, employment outcomes and a track record in education will all be assessed when deciding which colleges can access the loans program. Only students enrolled in courses aligned with industry needs and likely to lead to a job will be eligible for the loans. Exotic diplomas such as therapeutic arts counselling, fashion styling and veterinary Chinese herbal medicine are likely to be ruled ineligible. A three-tiered system of loan limits will be introduced, with loans capped at $5000, $10,000 and $15,000 depending on the cost of teaching the course.

Diplomas such as business management are likely to be capped at $5000, putting downward pressure on fees in those courses. Courses such as agriculture and engineering are likely to be in the higher bands. This is a more flexible approach than Labor, which took a policy of an $8000 loan cap to the election. Colleges will be banned from using brokers or directly soliciting potential students by cold-calling them or using other aggressive marketing techniques. Colleges have been exposed harvesting contact details for potential customers through online games offering iPhones as rewards. The new scheme will include tighter conditions so colleges can be paid in arrears and poor performing institutions can be suspended and have their payments cancelled.

TAFEs will be automatically eligible for the new scheme but will be subject to the same conditions as private providers. The 144,000 current VET FEE-HELP students will be able to remain in the old scheme until the end of next year if they choose. The changes are estimated to reduce the outstanding level of debt in the government's Higher Education Loan Program - which covers university and vocational loans - by $7 billion over the next four years and $25 billion over the decade. Senator Birmingham urged Labor and other parties to help the government legislate the new scheme so it can take effect from January 1 next year. VET FEE-HELP was intended to put vocational education students on a fairer footing with university students by allowing them to delay paying their fees until they earn a decent wage.

But it quickly blew out with tuition fees tripling and the number of students accessing the scheme exploding from 50,000 in 2012 to over 270,000 in 2015. How the dodgy college scandal unfolded 2009: A new system of vocational loans, originally legislated by the Howard government, comes into force. The aim is to put vocational students on a more equal footing with university students who do not have to pay up-front fees.

2012: The Gillard government expands VET FEE-HELP by removing the original requirement for colleges to have credit transfer arrangements with a higher education provider. This later comes to be seen as a major mistake.

2014: Reports of private colleges luring students into courses by offering free iPads, laptops and other inducements begin emerging.

March 2015: Abbott government announces crackdown, including a ban on inducements and limiting access to students with equivalent year 12 qualifications.

September 2015: Fairfax Media reveals the Phoenix Institute, a large private provider, has lured vulnerable people, including drug addicts and those with intellectual disabilities, into online diploma courses they would never complete. Phoenix is later deregistered and shuts down.

December 2015: Turnbull government places an emergency freeze on VET FEE-HELP loans and vows to redesign the scheme for 2017.

March 2016: Australian Competition and Consumer Commission launches court proceedings against the Australian Institute of Professional Education for engaging in unconscionable conduct and misleading students.

April 2016: Government releases a discussion paper exploring options to reform VET-FEE HELP.

October 2016: Government announces VET FEE-HELP will be shut down and replaced by a new, less generous scheme.