Protected amount

CRICOS providers must have a separate bank account where they hold course fee payments from overseas students who have not yet commenced their course. These students are known as ‘relevant students’ and this payment is known as the ‘protected amount’.

Section 29 (3) of the Education Services for Overseas Students (ESOS) Act 2000 provides these definitions.

When a CRICOS provider receives a protected amount from a relevant student, they must hold this payment in a specific type of account created for this purpose.

The protected amount must be deposited into this account within five business days of the CRICOS provider receiving payment of tuition fees. This is a requirement under 29 (2) of the ESOS Act.

Bank account requirements

A protected amount must be held in a bank account that is:

not available for the payment of a debt to any creditor of the provider (other than the overseas students who have pre-paid tuition fees)
not liable to be attached or taken in execution of a court order for payment to a creditor (other than the overseas students who have pre-paid tuition fees).

This bank account must be managed by an authorised deposit-taking institution (ADI) or a state bank. ADI and state banks are defined under Section 9 of the Corporations Act 2001 and/or Paragraph 51(xiii) of the Commonwealth of Australia Constitution Act.

The balance of the protected amount account must always be enough to refund all relevant students.

Withdrawing the protected amount

The ESOS Act allows for money to be withdrawn from the protected amount account in certain situations. These are to:

refund a relevant student when a provider defaults
refund a relevant student when that relevant student defaults, as per a written agreement
refund a relevant student, as per a written agreement, but where the agreement was not signed
refund a relevant student who has had their visa refused
pay for an alternative course when a provider defaults and they have made arrangements for a relevant student to study at a different institution
to pay a Tuition Protection Scheme (TPS) Director where that Director has refunded a relevant student.

At no other time may a CRICOS provider withdraw money from the account below the protected amount.

Once a student commences their course, they are no longer defined as a relevant student. At this point, the held protected amount may be reduced by the amount the student has paid in tuition fees, as these no longer represent a part of the protected amount.

ASQA’s role with protected amounts

ASQA has the power to request evidence of:

the existence of the protected amount account
the balance of the protected amount account
the protected amount itself
any money that has been withdrawn from the account below the protected amount
the ground for withdrawing money below the protected amount, if this has occurred.

ASQA can take significant action against a CRICOS provider who has not been compliant with these financial obligations.

CRICOS providers are advised to keep accurate and up-to-date records of the designated bank account, protected amount and any withdrawals made from the account.

Monitoring the protected amount

Under Regulation 9 (n) of the Education Services for Overseas Students Regulations 2018, Registered Providers are obliged to give information about the total of the tuition fees that are required to be paid for the student to undertake the course (including fees that have already been paid). Registered Providers give this information by entering the ‘Initial Pre-paid Tuition Fee’ against each accepted student’s Confirmation of Enrolment (CoE).

At any time, the total of Initial Pre-paid Tuition Fees entered against CoEs at ‘approved’ status and ‘visa granted’ status must not be higher than the balance of the protected amount maintained by the Registered Provider.

How to select a suitable account for maintaining the protected amount

Essentially, the account that holds the protected amount must satisfy the following requirements:

The account must be managed by an authorised deposit-taking institution (ADI) or a state bank.
The account must not be accessible for payment of any debt, other than to overseas students who have given the provider pre-paid amounts towards their course.
The account must not be accessible through court action to pay any creditor other than the overseas students who have given the provider pre-paid amounts towards their course.

Some accounts, such as certain types of trust account, with overseas students as beneficiaries will provide the adequate protections to satisfy the requirements for the account containing the protected amount.

ASQA cannot give providers financial advice about which account to select in creating a suitable account for the protected amount. Registered providers may consider seeking their own independent financial and/or legal advice before selecting an account for this purpose.