Tuition fee obligations
Sections 27 to 32 of the Education Services for Overseas Students Act 2000 (ESOS Act) outline a series of registration requirements aimed at protecting the tuition fees of students who are yet to commence their course. It outlines three specific requirements for Education Services for Overseas Students providers (ESOS providers) in relation to the handling of tuition fees.
- a separate bank account, of a specific type, must be established for the receipt and holding of student tuition fees
- student tuition fees must be paid into the bank account within five business days of receipt
- a credit balance must be maintained in the bank account sufficient to repay all tuition fees to every overseas student, or intending overseas student for courses that they have not yet commenced.
These requirements are separate to the TPS levy and must be complied with by all ESOS providers.
To assist in your understanding of these requirements, this webpage will provide answers to the following questions:
- What type of bank account must be established to meet the requirements of the ESOS act?
- Which tuition fees must be paid into the separate account?
- How much credit must be maintained within the account at all times (the protected amount)?
- When and how much can be withdrawn from the account?
- How do these requirements affect written agreement requirements?
- What is ASQA’s role in regulating the tuition fee obligations?
What type of bank account must be established to meet the requirements of the ESOS act?
To meet the requirements of sections 28 and 29 of the ESOS Act, providers must maintain a separate bank account where they hold tuition fee payments from overseas students who have not yet commenced their course. The bank account that tuition fees are paid into must:
- not be 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 be 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)
- 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 account that holds the tuition fees 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 accounts, 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.
Which tuition fees must be paid into a separate account?
Subsections 29(1) and 29(2) of the ESOS Act state that tuition fees received from an overseas student or intending overseas student, for a course before the student has begun the course, must be paid into the separate account within five business days.
What constitutes a tuition fee is specifically outlined in section 7 of the ESOS Act and section 7 of the Education Services for Overseas Students Regulations 2019 (ESOS Regulations). These sections dictate that a tuition fee includes all fees paid by a relevant student for:
- lectures, tutorials, tutoring sessions, training, excursions, fieldwork, laboratories, or practical experience, that:
- form part of the course that the provider is providing, or offering to provide, to the student (whether or not they are a mandatory part of the course); or
- are intended to assist the student to progress in such a course; or
- matters ancillary to the above activities.
What is a matter ancillary?
Matters ancillary is best understood as anything required to support the primary activity of providing training and assessment.
For example, if a student must have a particular workbook which contains course specific instruction, or tests and assessable tasks, and having this text is necessary to progress through the course, then the fee for this item is a tuition fee as per the Act and Regulations. However, if a provider offers other optional resources such as useful text-books or equipment, and while they may be useful items purchase of them is not a strict requirement to undertake and progress in the course, then the provider does not have to treat monies received for these items as tuition fees.
What is not a tuition fee for the purposes of sections 27 to 32 of the ESOS act?
Section 7 of the ESOS regulations outline a number of items which monies may be collected for that do not amount to a tuition fee. These monies must not be for matters ancillary and may include:
- books or equipment sold to the student
- health insurance
- accommodation (other than accommodation that the student occupies for a short time while undertaking training, excursions, fieldwork or practical experience)
- assisting the student to apply for or hold a student visa.
Awesome International Education Pty Ltd deliver a Certificate III in Commercial Cookery. At the time of enrolment, students may purchase from the provider several textbooks related to their study. These include:
- The comprehensive guide to Commercial Cookery
- A guide to basic meat butchering
- Modern pastry chef techniques
- Heavenly recipes: A collection of recipes from Michelin star restaurants.
The first three of these textbooks contain mandatory learning material for the student and are used during class lessons and practical lessons. As such, if a student did not purchase these materials, they would not be able to fully participate in the training.
The fourth textbook, Heavenly recipes: A collection of recipes from Michelin star restaurants, if purchased would be helpful to the student throughout the course of their study, but it is not referenced in learning materials and is not used in theoretical and practical training.
As such, if a student was to purchase all four textbooks, the monies received for the first three textbooks would be considered tuition fees, as their purchase is for ‘matters ancillary’, and the monies paid would have to be deposited in a specific account in accordance with sections 28 and 29 of the ESOS Act.
The monies received for the book, Heavenly recipes: A collection of recipes from Michelin star restaurants, would not meet the definition of fees for ‘matters ancillary’ and it would be up to the discretion of the provider as to whether they treated the monies as tuition fees or in a different manner.
How much credit must be maintained within the account at all times (the protected amount) ?
Section 29(3) of the ESOS Act stipulates that as a requirement of registration all ESOS providers must maintain, at all times, a sufficient amount (the protected amount) standing to the credit of the account to repay all tuition fees to every overseas student or intending overseas student (a relevant student):
- in respect of whom tuition fees have been paid to the provider; and
- who has not yet begun the course that the provider is to provide to the student.
Practically, ESOS providers may comply with these requirements by:
- entering the ‘Initial Pre-paid Tuition Fee’ against each accepted student’s Confirmation of Enrolment (CoE) into PRISMS
- maintaining accurate CoE status records in PRISMS
- ensuring that, at all times, they maintain credit equal to or greater than the total amount of Initial Pre-paid Tuition Fees entered against CoEs set at ‘approved’ status and ‘visa granted’ status.
When and how much can be withdrawn from the account?
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 Service (TPS) Director where that Director has refunded a relevant student.
At no other time may a ESOS 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.
How do these requirements affect written agreement requirements?
The National Code of Practice for Providers of Education and Training to Overseas Students 2018 (National Code) requires a registered provider to enter into a written agreement with each overseas student or intending overseas student concurrently with or prior to accepting payment of tuition fees. Amongst other things, the written agreement entered into by the registered provider and the overseas student must:
- List all tuition fees payable by the student for the course, the periods to which those tuition fees relate and payment options
- Provide details of any non-tuition fees the student may incur, including as a result of having their study outcomes reassessed, deferral of study, fees for late payment of tuition fees, or any other circumstances in which additional fees may apply.
It is important that tuition fees and non-tuition fees be outlined in written agreements. By providing a clear guide to the range of fees a student must pay, as well as additional non-tuition fees a student may incur throughout the course, a registered provider is assisting overseas students in ascertaining whether they can meet the fee requirements of their course.
It is also important that all fees are itemised as clearly as possible in the event that any dispute arises between the parties over ‘hidden’ costs.
Below are some questions to help you check whether you have clearly outlined tuition fees in a written agreement.
- Have you clearly listed all tuition fees a student must pay to undertake the course?
- Have you clearly identified the periods the tuition fees relate to (e.g fees for term 1, fees for term 2 etc)?
- Have you clearly set out any payment options? For example:
- Does the student need to pay term fees in advance? If yes, have you outlined when this payment becomes due?
- Can the student pay instalments by payment plan? If yes, have you outlined the terms of the plan and frequency of payments?
- Have you clearly identified any non-tuition fees a student may incur?
What is ASQA’s role in relation to these requirements?
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 grounds for withdrawing money below the protected amount, if this has occurred.
ASQA can take significant action against a ESOS provider who has not been compliant with these financial obligations.
ESOS 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.
ESOS providers should keep accurate records of tuition fees, enrolments and credit deposits and should use these records to ensure that, at all times, the credit amount held meets the protected amount requirements outlined under section 29(3) of the ESOS Act.
However, a method that can be used to perform a quick accuracy check is to calculate the total of initial pre-paid tuition fees entered against CoEs at ‘approved’ status and ‘visa granted’ status on PRISMS and compare the calculated figure against the credit amount maintained in their separate account.
The credit amount maintained in the separate account should be higher than the calculated figure.
If the calculated figure is higher than the credit amount held in the sperate account, the provider should undertake an immediate analysis to understand whether the credit amount held is insufficient or whether the records on PRISMS are accurate.