@Rebecca: Our Aussie shepherd has something very similar, except she has a skin condition called dermatitis. It’s basically the skin’s reaction to something they’re allergic too. The first thing you want to do is rule out what they’re having an allergic reaction tot. Change their food, if they sleep on any of your clothes, your bed, anything that is washed, change your laundry soap and dryer sheets. A common allergy for dogs is being allergic to beef; sounds crazy, but it is. If they get any treats/table scraps, completely stop giving them some for a few weeks. If you want to narrow it down, change something only once a week or two weeks and see how they react. No change means it’s something else.
The vet is probably going to tell you the same thing, and perhaps prescribe some medication for the infection from the itching.
Good luck! We’ve had our Aussie for 9 years and still haven’t figured out what she’s allergic too, even after numerous changes to her diet and our laundry, etc and so forth. To make her comfortable we use any shampoo with oatmeal in it or anything that the label states for “sensitive” skin.