Federal funding has been stripped from two of Australia's largest private colleges after they raked in more than $440 million from taxpayers in just three years.
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Careers Australia and Evocca - which have both come under scrutiny for alarmingly low completion rates and aggressive recruitment practices - were informed they would lose their accreditation under the federal government's new VET student loans system.
The two colleges have shed more than 24,000 students over the past year as the government cracked down on the sector.
They are two of more than 150 private colleges that found out on Tuesday that they have not had their accreditation approved, leaving up to 1700 students in limbo.
Approximately 1200 of these study at Evocca or Careers Australia, according to the Department of Education.
Hundreds of staff in Victoria, NSW and Queensland could also be facing the sack as the two institutions relied almost exclusively on public money to run their course in business, healthcare and IT.
More than 150 staff were let go from the Parramatta office of Careers Australia in December following an initial crackdown on the scandal plagued VET FEE HELP student loans scheme last year.
Students at Careers Australia's Melbourne campus, who had finished their classes for the day, said they had been left in the dark.
Nursing students said the college had not told them about the changes, and they were unsure whether they would have to continue their studies elsewhere.
"We don't know where we could be in the future or what's going to happen to us," said Sally-Anne Richardson, who is half way through her course.
"Everyone is confused."
The company, which once educated more than 13,000 students and has campuses in the Sydney and Melbourne CBDs, paid back $44 million in taxpayer funding last year after it admitted it had breached Australian consumer law and "engaged in unconscionable conduct" while it enrolled students in some of the poorest, most remote communities in Australia into thousands of dollars of debt.
The company has since been delivering training to hundreds of the country's future electricians through a partnership with industry body Master Electricians Australia.
The Electrical Trade Union's national apprentice officer Mark Burgess said Career Australia's "unethical behaviour," meant they "should never have been accredited to deliver training to electrical apprentices, particularly through on-line platforms."
Evocca, trading as ACTE, was recently awarded lucrative training contracts separate to the VET student loans scheme worth hundreds of thousands of dollars for the Australian Federal Police and the Department of Defence.
The latest VET FEE HELP data for 2015 revealed Evocca earned $110,000 in taxpayer funding per graduate between 2013 and 2015 after only 1600 of its 13,000 students completed their courses. It earned $180 million in funding over that period.
In the same period, Careers Australia earned more than $264 million in taxpayer funding while graduating only 14.7 per cent of students.
The two were some of the biggest beneficiaries of the VET FEE HELP scheme which blew out from $325 million in 2012 to $2.9 billion in 2015.
A spokeswoman for the Department of Education said the two colleges had their funding stripped over "very poor completion rates" and failed to satisfy the department of their "complaints handling processes and methodologies for ensuring that students are genuine and academically suited to the course".
Education Minister Simon Birmingham said he made no apologies for ensuring taxpayer money went to high quality providers.
"We are committed to a program that protects students and demands training providers demonstrate positive outcomes for their students before they can expect to grow," he said.
Australian Council for Private Education and Training chief executive Rod Camm said: "It has been a very difficult time for the sector and these changes will cause a further period of unrest and probably more closures over coming months."
In a statement Evocca said it was "surprised and disappointed with the decision".
A spokesman said the change would affect students who enrol after June and that current students would be able to continue to study and access their loans until the end of the year.
The company "remains committed to the teaching all of these students to the end of their course and subsequent graduations [and] this includes having face to face facilities, he said.
Careers Australia has been contacted for comment.
With Jackson Graham
