CANBERRA, Dec 2 - The legislation passed late on Thursday night, after having bounced back and forth between the upper and lower houses as Labor tried unsuccessfully to have TAFE courses exempt from the new restrictions.
Under the new scheme starting from January, the number of courses eligible for loans is being more than halved to about 350 and loans are capped at $5000, $10,000 or $15,000 based on what the government believes delivery costs should be.
It's expected 90 per cent of the loans will fall into the $10,000 band.
All private providers will have to re-apply to be eligible to offer loans, though some high quality organisations will be deemed approved for six months during the transition process.
The new scheme also includes:
* bans on recruitment brokers and cold-calling potential students
* requirements for students to show they're active
* powers to cap provider loan amounts and student numbers and to suspend poor performing providers.
The government hopes its overhaul will end the waste, rorting and reputational damage in vocational education.
Senator Simon Birmingham labelled the old scheme fundamentally broken after loans blew out from $325 million in 2012 to $2.9 billion in 2015.