Federal education regulators were still deciding whether to take action against a problem-plagued Sydney hairdressing college when it closed down and left hundred of students stranded.

Key points: College was audited in 2015 and was the subject of highly publicised rorting allegations

College was audited in 2015 and was the subject of highly publicised rorting allegations Investigations were done by the training authority in 2016, but Senate hearing today heard the college has gone into liquidation

Investigations were done by the training authority in 2016, but Senate hearing today heard the college has gone into liquidation The Education Department says NSW Police have investigated the college

The Australasian College Broadway shut its doors over Christmas, leaving an estimated 800 students with nowhere to study and with government training debts.

The organisation has now been the subject of fiery discussions before a Senate Estimates hearing in Canberra.

The college was the subject of well-publicised allegations of rorting of the controversial VET-FEE-HELP training loans scheme, under which it received at least $8.3 million in 2016 alone.

During a hearing of the Education and Employment Estimates Hearing today, Labor senator Doug Cameron pointed out that the college's owner Maureen Houssein-Mustafa was a National Party donor.

The committee heard from regulators there had been concerns about the college's recruitment practices, progress rates and accusations that it enrolled phantom students.

College already in liquidation

Education Department bureaucrats and regulators told Senator Cameron that they had been investigating the college before it went into administration in late 2016, but to date in 2017 were yet to make a final regulatory decision.

Australian Skills Quality Authority (ASQA) regulation commissioner Professor Michael Lavarch said an audit of the college in 2015 ASQA did identify past problems and the authority attached extra reporting requirements to the college's registration.

It did a further investigation in 2016.

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It was after that investigation that the college was issued with a notice of intention about regulatory action, which it responded to just before it went into voluntary administration. It was still operating at that point.

"We're getting close to the making of a regulatory decision," Professor Lavarch told the committee.

Later in the hearing, regulators said they had learned the college already went into liquidation on February 8.

"It would appear on the information that's now available to us that that RTO [registered training organisation] is no longer operating," ASQA commissioner Mark Paterson said.

Professor Lavarch said they were aware of a NSW Police investigation into the provider but not specific details, but said of the issue of phantom students: "Certainly would in aspects come under our jurisdiction, it could under a particular circumstance obviously interest the police more broadly."

NSW Police investigating Australasian College

Senator Cameron repeatedly asked panel members why the Government continued to fund the college throughout 2016 despite well-canvassed concerns.

Education Minister Simon Birmingham responded that he had to work within the current training laws at the time and ultimately closed down the VET-FEE-HELP scheme that was initiated under Labor.

Federal Education Department deputy secretary Dr Subho Banerjee said the department was also aware of the NSW Police investigation into Australasian college.

"There's been a great deal of concern about valid student enrolments and whether or not some RTO's, in your words, have a number of phantom student enrolments, and that's been of a matter of grave concern to the department," he said.

The committee heard the college had been an approved training provider since at least 2009, and that it was not approved to offer VET-FEE-HELP training loans under the Government's revamped scheme.

It heard the new scheme had enhanced compliance and audit powers but also the bar to get into the new scheme had been moved higher.

The committee heard the Australian Council for Private Education and Training was helping students affected by the college's closure to find new training.