The federal government is believed to have provided $160 million in funding to ACN over 2015 through VET FEE HELP loans. In recent months, the sector has ballooned to $3 billion.

The department deferred $40 million in funding in the final quarter of 2015 following concerns about its practices. A further $300 million was also supposed to flow into the coffers of ACN over the next year.

About $135 million of shareholder money, including $30 million worth of shares held by Regal Funds Management has also been burned by the collapse.

The Victorian government has also provided millions in funding for students doing courses at ACN's colleges but it severed funding to all but Cove and Smart Connections over concerns about ACN's governance and compliance.

Students at Consider This Training, Cove Training, Smart Connection, Wizard Corporate Training, Australian Management Academy and International Training College are all affected by the collapse.

Ferrier Hodgson is hoping to sell Wizard, International Training College and Cove – the latter of which is expected to lose its state funding now its owner has entered administration.

ACN's main college, the Phoenix Institute, closed in 2015 amid allegations by the Department of Education and the Australian Competition and Consumer Commission that brokers acting for the college had intentionally targeted vulnerable students.

Fairfax Media revealed Phoenix's brokers had signed up several people living in an Indigenous community with limited internet access to online diplomas that carried debts of almost $30,000. People with intellectual disabilities were also signed up to huge VET FEE-HELP loans to study diploma and certificate courses.


On Monday, Fairfax Media revealed ACN had shed almost 600 jobs in recent months. Representatives from the company have denied to Fairfax Media on two occasions in recent weeks that the company was considering appointing administrators.

Sources close to the administration process said the company was likely to consider using its insurance and cash reserves to mount legal challenges against the Department of Education over the deferral of funding.

Administrators are also expected to review the company's Victorian funding arrangements and to consider whether any legal action can be taken against the state government.

Thousands more students in Victoria enrolled in courses through Phoenix are using a VET FEE HELP loan. A Victorian Education Department spokesman said it had been supporting students at Consider This Training and Australian Management Academy since the funding was cut.

Federal Minister for Vocational Education and Skills Scott Ryan said the industry body Australian Council for Private Education and Training would also help to find new placements for affected students.

Minister Ryan blamed the former Labor government for setting up the uncapped VET FEE HELP scheme that had insufficient student protections in place.

"The original scheme opened the floodgates to shonky training providers and predatory brokers to take advantage of the system," Minister Ryan said.

Victorian Vocational Education Minister Steve Herbert said the Andrews government wanted to work with the Turnbull government.


"Victoria is cleaning up the sector and we're also leading the country in cracking down on unscrupulous training providers," Minister Herbert said.

Minister Herbert said ACN's collapse was a lesson for all training providers that "they need to do the right thing".

"The days of cowboy government-funded training providers are coming to an end," Minister Herbert said.

In a joint statement, Shadow Minister for Higher Education Kim Carr and Shadow Minister for Vocational Education Sharon Bird said VET FEE HELP funding had ballooned to $3 billion under the Coalition government.

"Malcolm Turnbull now needs to step up and clean up the mess in the VET sector, stop the rorts and come clean on his plans for a TAFE-destroying takeover."

ACN's shares have been suspended since October and last week it revealed its accounts would be delayed as the board "considered its options".

"ACN's attempts to negotiate a satisfactory outcome with the Department of Education to recover deferred outstanding VET FEE-HELP payments have been unsuccessful to date," ACN founder Ivan Brown said in a statement.

"The board anticipates that every effort will be made by the voluntary administrators to protect stakeholder interest by ensuring that all avenues are pursued to recover outstanding monies owed to ACN by federal and state agencies," Mr Brown added.

The company's website says ACN sponsors the AFL's Richmond Football Club and A-League team Melbourne Victory.

Sydney Morning Herald