In supporting the government’s Education Legislation Amendment (Provider Integrity and Other Measures) Bill 2017 in the House of Representatives yesterday, shadow universities assistant minister Terri Butler said ‘Labor supports greater protection for students, particularly those accessing the FEE-HELP system’.

The provider integrity bill would put some extra constraints on the marketing activities of non-university higher education providers (NUHEPs), whose domestic students typically use FEE-HELP (because they are denied access to the Commonwealth supported places that would let them use HECS-HELP).

But the provider integrity bill also exposes NUHEP students to new risks, and greater risks than students in the university system.

If a student in a public university fails most of their first year subjects, they will probably be sent to their institution’s unsatisfactory progress committee. But whether they continue with their studies will be an academic decision that can take a holistic view of the student’s circumstances.

Under the provider integrity bill, a NUHEP student using FEE-HELP – there were 46,000 of them in 2015, although students enrolled before 1 January 2018 will be grandfathered – will lose FEE-HELP eligibility if they fail too many subjects, and have to pay upfront fees unless they can demonstrate that there were special circumstances that were beyond their control, did not have their full impact until after the census date at which they incurred their HELP debt, and made it impractical to complete the unit.

Denying HELP loans to students who fail too many subjects might be a justifiable idea – we would need to do some statistical analysis to see how well subject failures predict longer-term bad outcomes. But if it is a sound idea, it should not just apply to students in NUHEPs. They are only a small percentage of all students, and therefore a small proportion of the costs to HELP of failed subjects.

Under the provider integrity bill, failing too many subjects is just one of several ways NUHEP students can lose their FEE-HELP entitlements.

To be eligible for FEE-HELP a NUHEP student must be ‘genuine’. The bill’s explanatory memorandum says the definition of a genuine student will be similar to the relevant provisions for VET Student Loans.

Assuming that the higher education rules match the VET rules, to be deemed genuine a student needs to have satisfied course requirements such as participating in assessment, in the case on online courses have logged in a ‘not insignificant’ number of times, and generally be reasonably engaged. Critically, this has to happen early in the course, as a HELP debt is incurred on the census date, which can only be a few weeks into semester.

There is merit in checking early on that students are engaged with their courses – many providers now do this. But this change has much potential for catching out students who are not aware that they could lose their funding if they are slow to engage, despite fully intending to do so.

If genuine student provisions are introduced, rules would be needed as to how they were implemented (the government says it will work closely with the sector on this). At the moment, students do not believe that the census date is academically significant. If the rules change, they could unexpectedly be denied FEE-HELP. Unlike for the provisions around failing units, there is no provision in the legislation for special consideration against a decision that the student is not genuine.

In other contexts, NUHEP students could lose FEE-HELP despite having engaged with and passed all their subjects to date. This is because the provider integrity bill gives the minister much greater discretion than now to cap FEE-HELP at the higher education provider level (there has always been a maximum amount students can borrow). The minister can cap the total number of students at a provider receiving FEE-HELP or the amount of FEE-HELP payable to the provider.

These provisions could force NUHEPs to deny FEE-HELP to students who otherwise satisfy all the eligibility criteria for FEE-HELP. The explanatory memorandum claims that these caps would not affect current students, but I cannot find anything in the actual bill that supports this interpretation. It will rely on some common sense being exercised in the capping process.

The purpose of the provider integrity bill is to protect students and taxpayers from the rogue behavior in the vocational sector that caused the VET FEE-HELP fiasco. That’s a sensible policy goal, and the parts of the provider integrity bill that tighten the rules on provider entry to the system look reasonable. But an unintended consequence of other provisions is that as well protecting students from unscrupulous providers, this bill will sometimes require honest providers to treat their students unfairly.