The growing importance of fee protection programmes
- Programmes that protect prepaid student fees will likely have a greater role to play this year as student mobility begins to resume
- One model from New Zealand provides a very broad protection for a range of prepaid fees, and provides an interesting benchmark for more comprehensive consumer protection
As the global economy, and individual national economies, begin to transition this year from crisis to recovery, international educators are also laying plans for increased supports for incoming students. These run the range from additional pre-departure outreach to strengthened housing and settlement services and more.
Within this context, we might also consider the importance of fee protection programmes, especially in that students will soon be encouraged to once again send advance payments for tuition and housing. We can imagine that there will be more flexibility in payment terms and timing of payments as student mobility begins to resume later this year. But it is also reasonable to anticipate that both students and agents may have concerns around advance payments, especially amid news of school closures and with the prospect of a difficult recovery ahead.
Fee protection programmes will therefore have a particularly important role to play in bolstering consumer confidence during the recovery-to-come. There are many such mechanisms in place already. In some cases, they apply to regulated agencies in sending markets or in others to schools in study destinations. They range from more informal schemes – for example, where members of school associations may accommodate displaced students in the event of a school closure – to more tightly regulated deposit or bonding programmes.
When this topic comes up among industry colleagues, one example that is likely to be cited is New Zealand’s Fee Protect programme. The programme derives from a requirement of the New Zealand government that all private training establishments (PTEs) registered with the New Zealand Qualifications Authority (NZQA) have some form of protection for fees paid to them in advance.
The programme operates in effect a student fee trust account. As such, it ensures that students can receive a refund of prepaid fees if the school is unable to deliver the booked course due to closure, insolvency, or loss of NZQA accreditation.
Fee Protect takes a broad view of prepaid fees, and its refund provisions include any fees paid for:
- tuition
- housing
- living expenses
- travel and health insurance premiums (if arranged through the education provider)
In short, the programme covers, “all payments made to a PTE, including accommodation and living expenses (includes homestay, living costs and other monies paid to or held by the PTE on a student's behalf).”
As a related statement from the New Zealand government puts it, “Fee Protect means the last thing you will need to worry about is what happens to your fees.”
Aside from its broad reach in protecting or recovering all types of prepaid fees, there are two interesting aspects in the Fee Protect model.
First, it allows some flexibility to PTEs in providing security for pre-paid fees via trust accounts and/or bonding provisions. This allows for fees to be deposited into a Public Trust student trust account, and then to have them paid out by the trust to the education provider throughout the duration of the student’s programme. Alternately, the provider may arrange a bond as a security against pre-paid fees, from which refunds may subsequently be drawn as needed.
Second, the programme springs from a regulatory requirement and is tied to the registration of the provider within the country’s quality assurance and standards framework, the NZQA. This is, needless to say, a significant aspect of oversight and regulatory control for protecting prepaid fees.
While arrangements vary from destination to destination, protection schemes of all types will likely now figure more prominently as a security and incentive for prepayment as student mobility resumes in the second half of this year and into 2021.
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