The Tuition Protection Service (TPS) assists international students on student visas whose education providers are unable to fully deliver their course of study.
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Underpinned by the Education Services for Overseas Students 2000 (the ESOS Act), the TPS framework protects international students on student visas when their provider defaults. That is, their provider closes, fails to start, or stops offering a course.
The TPS framework requires that if a provider defaults, they have a legal obligation to either arrange students to continue their studies at an alternative provider; or provide students with a refund on unspent tuition fees.
The TPS is sector funded. Providers contribute an annual levy calculated based on size and risk of default. The levies fund the placement and refund activities.
Providers who expect they may be at risk of defaulting in the near future are encouraged to contact the TPS as early as possible at email@example.com.
Providers do not need to register for the TPS. Coverage by the TPS is automatic upon CRICOS registration and payment of the initial TPS levy. As part of the CRICOS registration, you will be required to pay the initial TPS Levy. The registration will not commence until this fee has been paid. Following thereafter, you will be required to pay CRICOS registration fees and the TPS Levy annually.
Ongoing provider requirements
The ESOS Act sets out ongoing requirements providers must meet to maintain their CRICOS registration including obligations relating to record keeping and financial requirements.
Student record keeping requirements
A registered provider must keep records of each accepted student who is enrolled with the provider or who has paid any tuition fees for a course provided by the provider. These records must be kept for two years after the person ceases to be a student. The records must consist of the following details:
- the student’s current residential address
- the student’s mobile phone number (if any)
- the student’s email address (if any)
Every six months the provider must confirm with the student in writing that these details are still correct and update the records accordingly.
Records of assessment
Providers must keep up-to-date records of student’s progression and assessment for the unit of study and must also record the outcome of the student’s assessment for the unit.
Tuition fee requirements
Under the ESOS legislation, a provider must not receive more than 50% of the total tuition fees for a course before the student has begun the course, unless:
- the student, or person making payment on their behalf, chooses to do so
- the course has a duration of 25 weeks or less.
Providers should be able to show evidence that students have exercised choice in how much of their tuition fees are paid up front. There are no restrictions on collecting tuition fees after a student has started their course.
When entering into a written agreement, providers should clearly set out what period of time a payment of tuition fees relates to. Refunds paid under section 47E of the ESOS Act are calculated under the Education Services for Overseas Students (Calculation of Refund) Specification 2014, which involves working out how many weeks are in a default period and the associated tuition fee. As per the requirements of the ESOS Act, the written agreement must include the following information about tuition fees:
- total fees to be paid, including tuition and non-tuition fees
- amounts that may or may not be repaid to the overseas student (including any tuition and non-tuition fees collected by education agents on behalf of the registered provider)
- details of any non-tuition fees such as application fees the student may incur, including any fees as a result of having their study outcomes reassessed, deferral of study, fees for late payment of tuition fees, or other circumstances in which additional fees may apply
- processes for claiming a refund
- the specified person(s), other than the student, who can receive a refund in respect of the overseas student identified in the written agreement, consistent with the ESOS Act
- a plain English explanation of what happens in the event of a course not being delivered, including the role of the TPS
- a statement that "This written agreement, and the right to make complaints and seek appeals of decisions and action under various processes, does not affect the rights of the student to take action under the Australian Consumer Law if the Australian Consumer Law applies".
All providers, except Universities, TAFEs, and government schools, are to place all pre-paid tuition fees paid by students before they have commenced into a designated account. The amount of money in the account is known as ‘the protected amount.’ The designated account should be a separate bank account within the ordinary meaning of 'account'.
This account can only be drawn down when the student commences the course. Providers should establish a mechanism for keeping pre-paid tuition fees separate from day-to-day operating expense accounts, so that if a refund is payable before the student commences, the refund can be made in full and in a timely way without impact on the financial operations of the business or recourse to the tuition protection system.
The intention is that initial pre-paid tuition fees held in this account will not be available for the payment of debts of the provider including if the provider goes into administration. A provider should not mix pre-paid tuition fees held in a designated account with other money.
Strong penalties will be imposed for non-compliance with this requirement.
All CRICOS providers are required to pay an annual TPS Levy. This is set out in the Education Services for Overseas Students (TPS Levies) Act 2012. The TPS Advisory Board has released its advice to the TPS Director regarding the settings for the 2022 TPS Levy. The levy settings are available and propose retaining the settings from this year in recognition of the ongoing impact of the Covid-19 pandemic on the sector.
The Overseas Students Tuition Fund
Funds collected through the TPS Levy are paid into the Overseas Student Tuition Fund. It will be used for funding the placement and refund activity for international students and is managed by the TPS Director.
The amount of the levy is the sum of the following components:
- Administrative fee component (determined by the Minister)
- Base fee component (determined by the Minister)
- Risk rated premium component (determined by the TPS Director)
- Special tuition (determined by the TPS Director)
In 2021 the amount of the levy is the sum of the following components:
- Administrative fee component for the year is the sum of $89.60; and $0.46 multiplied by the total enrolments for the provider for the previous year (2020)
- Base Fee Component for a year is the sum of $180; and $1.14 multiplied by the total enrolments for the provider for the previous year (2020)
- The risk rated premium component is 0.04%
- Special tuition protection component is zero
The risk factors determined by the TPS Director are intended to reflect the risk of default.
- Base risk
- Length of operation
- Volatility in overseas student enrolments
- Maximum overseas source country concentration
- Non-compliance and registration renewal
A registered provider's risk rated component of the TPS Levy for a year is worked out in accordance with the following formula:
(Specified percentage for the year × Increase factor for the risk factor for the year) × Provider's overseas student tuition fees for the previous year
The specified percentage rate for the 2021 TPS Levy is 0.04%, a temporary reduction from 0.07% in recognition of the effects of the Covid-19 pandemic.
Risk rated premium component
Special tuition protection component
Before the beginning of each year, the TPS Director must, by legislative instrument, specify a percentage for that year. The percentage specified rate for 2021 is zero.
A registered provider's special tuition protection component for a year is worked out in accordance with the following formula:
Specified percentage for the year × Provider's overseas student tuition fees for the previous year
Annual income declaration
Prior to the levy collection, a request for information will be sent to a provider, asking them to declare their tuition fee income.
Tuition fees are payments for lectures, tutorials, tutoring sessions, training, excursions, fieldwork, laboratories, or practical experience, that help students progress their learning. These fees are paid by, or on behalf of:
- International students
- Intending overseas students
Providers can declare the income on an accrual or cash basis making the appropriate adjustments, as long as it is consistent year to year and consistent with their financial reporting practices.
Providers should include income received from overseas students or intending overseas students on a student visa (subclass 500) that relates directly to the provision of tuition. This does not include any other form of visa. Furthermore, providers may adjust income to account for any tuition fee refunds.
How to calculate enrolments
The ‘Fees and Charges’ section of the ESOS Framework outlines how providers need to calculate enrolment numbers.
A provider default occurs when a provider either closes, fails to start, or stops providing a course to a student or intending student. Under section 46A of the ESOS Act, a registered provider defaults, in relation to an overseas student or intending overseas student and a course at a location, if:
- the provider fails to start providing the course to the student at the location on the agreed starting day and the student has not withdrawn; or
- the course ceases to be provided to the student at the location at any time after it starts but before it is completed and the student the student has not withdrawn.
See section 46A of the ESOS Act for a more detailed description of provider defaults. Providers should contact the TPS immediately if at risk of defaulting.
Obligations if a provider defaults
If a provider has defaulted, within 14 days the provider must either arrange a replacement course for its students or provide a refund. This timeframe is known as the provider obligation period.
In fulfilling these obligations, the student must be satisfied with their refund or replacement course option and accept the offer in writing.
Providers should contact the TPS immediately if they are unable to meet these obligations. Failure to comply is an offence of strict liability.
How to calculate a refund
Refunds entitlements for students must be calculated in accordance with the Education Services for Overseas Students (Calculation of Refund) Specification 2014. Providers should see the Specification and its Explanatory Statement for details on the calculation.
The calculations can get complex. The TPS will help providers calculate their refund amounts to make sure they are compliant with the legislation.
Reporting the default
Providers are required to notify students, TPS Director and the ESOS Agency within 3 business days of the default occurring. Providers must do this by recording the default in PRISMS.
Providers are required to notify the outcome of discharge of obligations within 7 days of the provider obligation period end date. Providers can do this at the same time as recording the provider default; or return to the default later to record the outcome.
Please note, there are many notice requirements if providers default. See:
- Education Services for Overseas Students (Notifying provider default – requirements for a notice) Determination 2012 (No. 1)
- Education Services for Overseas Students (Student default – discharge of obligations – requirements for a notice) Specification 2015 (No. 1)
- Sections 46B, 46D and 46F of the Education Services for Overseas Students Act 2000
Reporting through PRISMS will ensure providers meet these requirements. Failure to comply may result in strict liability offence.
A student default occurs when a student:
- does not start the course on that day; or
- the student withdraws from the course at the location (either before or after the agreed starting day due to visa refusal); or
- the student failed to pay an amount they were liable to pay the provider
- the student breached a condition of their student visa
- there is misbehaviour by the student.
If a student default occurs the provider and student must follow the refund requirements in the written agreement that apply to student default situations.
The TPS may contact providers with an opportunity to enrol additional students. This will happen when there has been a default and there are students who need to continue their studies.
Becoming a replacement provider
Following a provider default the TPS will provide options to students for placement in similar courses. The TPS uses the following guiding principles for selecting alternative courses:
- similar courses
- same or proximity to the existing place of study
- availability of capacity; and
- providers who offer most of the affected courses would be prioritized above providers who only offer some or a few of the courses.
As a rule, the TPS would see providers who meet the above criteria, generally within 5km of the existing provider depending on the geographic location. There may be exception to this (e.g. in regional areas or in the CBD where there is higher concentration of providers). To provide a reasonable choice to students, the TPS would work within the following parameters:
- 100 or less students – 3-4 providers
- 100-500 students – 5-7 providers
- Over 500 students – up to 10 providers
- TPS would exclude providers when it is aware of any regulatory action affecting a provider.
The process of placing student with replacement provider is multi-faceted.
- firstly, the TPS will contact providers that have been identified as a potential replacement provider and seek their consent to offer placements to affected students
- if the potential replacement providers agree to accept affected students, the details of the replacement course become available to affected students
- interested students will contact the potential replacement provider and discuss the course and enrolment process
- the replacement provider then creates an offer of place to the student on the TPS system
- the student(s) complete the enrolment in the TPS system
- once a student has a Confirmation of Enrolment (CoE), the replacement provider receives a payment of the unspent tuition.