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Clause 7.3

Protect prepaid fees by learners

Clause 7.3

Where the RTO requires, either directly or through a third party, a prospective or current learner to prepay fees in excess of a total of $1500 (being the threshold prepaid fee amount), the RTO must meet the requirements set out in the Requirements for Fee Protection in Schedule 6.

What this Standard means for your RTO

‘Prepaid fees’ (sometimes referred to as ‘fees collected in advance’) means fees collected before the relevant services have been provided. These include payments made at any time before, during or after the learner enrols. Your RTO may collect up to $1500 fees in prepaid fees from a learner without needing to take any action to protect these fees, as explained in Schedule 6 (refer to Appendix 2).

RTOs registered on the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) must satisfy both the requirements of this clause and of the Tuition Protection Service (TPS) under the Education Services for Overseas Students Act 2000. The TPS requires that not more than 50 per cent of the fees for an overseas student be prepaid. This applies even if 50 per cent of the course fees would be less than the threshold prepaid fee amount.

The requirements that apply to prepaid fees include all fees that a learner is required to pay, including enrolment fees, tuition fees, materials fees and any other fee component that is a mandatory payment for the course.

RTOs are only required to protect prepaid fees from individual learners and prospective learners. These requirements do not apply, for example, where an employer engages an RTO to provide training and/or assessment to its staff.

Government entities and Australian universities

If your RTO collects more than the maximum $1500 per learner in prepaid fees, you must have and implement a policy that details how, if your RTO is unable to provide the services which have been paid for, learners will be:

  • placed into an equivalent course without having to pay any additional fees for the portion of the course they have paid in advance, or
  • refunded for all fees paid in advance over $1500.

As required by Standard Five, you must notify learners of the fees they must pay and when they are due, as well as providing access to your RTO’s fee protection policy.

All other RTOs

Where your RTO collects more than $1500 per learner in prepaid fees, you must take action to protect the prepaid fees that exceed $1500 for any learner. In these instances, you must have at least one protection measure in place for each learner; however, this does not have to be the same measure for all learners (see Schedule 6 for types of protection measures).

If you never hold more than $1500 in prepaid fees from any learner, you do not have to take further action to protect the fees of learners.

Consider how best to structure your fee payment schedule.

  • If you offer a 10-week course that costs $2000, the course costs $200 per week. Therefore, you could collect $1500 at the time of enrolment and the remaining $500 after week seven without needing to have any protection measures in place.
  • If you wanted to collect the total course cost at the time of enrolment, you would have to have one or more of the measures in Schedule 6 in place.
  • There are many other options you could choose, such as collecting weekly fees, or collecting a deposit of up to $1500 at the time of enrolment and then a weekly amount equal to the calculated weekly cost of the course.

If your RTO is required to have fee protection measures in place, it can:

  • hold an unconditional bank guarantee to cover at least the amount of prepaid fees in excess of $1500 for any learner
    • If choosing this option, your RTO needs to ensure the guarantee is structured so that you can refund learners’ fees that have been prepaid in excess of $1500 in circumstances where the RTO is no longer able to deliver the training and assessment. For example, you may have an arrangement where an independent party has authority to access the guarantee.
    • You may be required to demonstrate how the amount of the guarantee was arrived at and how you monitor and ensure that this level is always greater than the amount of fees required to be protected.
    • This option does not need to be approved by ASQA, but you must be able to demonstrate how the guarantee meets the standard, if requested by ASQA.
    • Note that ASQA is not available to act in administering any such guarantee or acting as beneficiary and that any costs associated with the guarantee must be met by the RTO.
  • hold membership of a Tuition Assurance Scheme approved by ASQA that applies to all relevant students, and/or
  • put in place another measure approved by ASQA

The requirements for protection of prepaid fees apply no matter how the fees are collected. Any fees collected by a third party to your RTO (including by an education agent or broker) are subject to the same conditions and your RTO is responsible for ensuring that protection measures are in place and implemented as required. These requirements apply to fees prepaid by learners, regardless of when your RTO actually receives the payment.

If you are using a commercial ‘shopping cart’ system to collect online payments, ensure that the system does not allow learners to prepay more than the maximum amount allowed by the arrangements you have in place. This may be as simple as specifying all course fees in the shopping cart and allowing only single purchases.

As required by Standard Five, you are required to notify learners of the fees they must pay and when they are due.

A guide to compliance

Government entities and Australian universities

RTOs in this category can demonstrate compliance by providing their fee protection policy and demonstrating how this is accessible to learners. If the RTO has needed to enact the policy, it could show the process that was followed.

All other RTOs

Where an RTO is not collecting more than $1500 in prepaid fees from any learner, this could be demonstrated through marketing and enrolment material that includes fee schedules that, collectively, show the RTO does not require more than $1500 to be prepaid for any course. In this case, no further evidence would be required.

Where an RTO is collecting more than $1500 in prepaid fees from any learner, retain evidence to show how any fees above the threshold prepaid fee amount are protected. Evidence might be in the form of:

  • confirmation of current membership in one or more approved Tuition Assurance Schemes (TAS) that includes all of the relevant courses and delivery locations
  • evidence that the RTO holds a current bank guarantee for a suitable amount (calculated based on the total amount of prepaid fees in excess of $1500 per learner the RTO would hold at any time).

It may be that an RTO uses a combination of measures for different courses or different learners. In this case, the RTO must retain evidence of how all learners’ fees are protected.

If ASQA has approved an alternative fee protection measure, retain evidence of current approval of that measure and your compliance with the measure.

Regardless of the method/s your RTO uses for protection of learner prepaid fees, as required by Standard Five, you must retain evidence of how learners have been advised of:

  • all payment terms
  • the circumstances under which refunds may be issued

Information provided to potential learners, learners or clients must be consistent with the RTO’s arrangements.

If your organisation is seeking registration as an RTO, you must confirm whether you plan to collect more than $1500 in prepaid fees from learners at any time. If you intend to do this, you must demonstrate how one or more fee protection measure/s will be implemented for all relevant learners.

Note that ASQA will not accept an application for alternative fee protection measures from organisations seeking registration as an RTO.

Case study: Fee protection made simple

KLM Training offers qualifications in the security industry from its head office in Perth and a range of individual units and skill sets from its Perth office and several sites across WA.

Payment of fees is required prior to commencement of the training. For example:

  • The Certificate II in Security Operations offered by the RTO is priced at $975, so does not require any fee protection measure for learners in this course.
  • The Certificate III in Security Operations is priced at $1675 and is run over five weeks. Learners are required to pay a deposit on enrolment of $75. They are then invoiced for $800 due to be paid on the first day of training and a further $800 due at the start of the third week of training.

KLM Training does not collect more than $1500 in advance for any learner, so does not have to implement any fee protection measures.


Case study: Consistency brings simplicity

NOP Training operates from a head office in Melbourne, and has branches in Sydney, Canberra and Albury. The RTO has third party arrangements with organisations in Launceston, Hobart and Bendigo. Over 100 different qualifications are offered, mostly in the business, IT, health and community service areas.

Regardless of the cost of the course, NOP Training has implemented a consistent fee model across all courses. All courses require payment of a non-refundable fee on enrolment ($100). The balance of the fees are divided into two equal payments, one due on the first day of training and the other due either at the start of week six or at the start of the last week of training for courses shorter than six weeks. These same arrangements apply across all four of the RTO’s branches, and all courses offered by third parties. While NOP Training could collect the entire fees up-front from some individual learners, implementing a consistent payment framework avoids confusion, provides a consistent cash flow and ensures compliance with the Standards.

Where NOP Training is contracted to provide training to staff groups from various companies, full fees are payable prior to training, as they are paid for by the employer rather than the learner.

NOP Training does not collect more than $1500 in advance for any learner, so does not have to implement any fee protection measures.

Case study: Guarantee brings flexibility

QRS Training offers three qualifications from the Sport, Fitness and Recreation Training Package. The duration of the courses ranges from six weeks to 18 months, and fees range from $4900 up to $12,000. All fees must be paid prior to the commencement of training for all courses. The courses all operate on a ‘rolling intake’ model, with new students starting each Monday.

QRS Training calculated that, as it had 200 students undergoing training at any time, all at different stages, it was holding approximately $400,000 in advance at any time. To safeguard prepaid fees by leaners, QRS Training arranged a bank guarantee for $400,000 to cover all fees paid in advance.

Should the provider not be able to meet its financial obligations, conditions allow the guarantee to be called upon by the RTO’s solicitor. Having a bank guarantee in place means that QRS Training do not need to restrict the amount of fees learners are required to pay at any time.