Tuition assurance

The ESOS legislation provides three layers of consumer protection in relation to tuition assurance. The first is a requirement on all providers to pay a student a refund of course money in the case of either a student or a provider default. If that remedy fails, the second layer provides for placement of a student in an alternative course through a Tuition Assurance Scheme (a ministerially approved scheme comprising member organisations that can offer comparable courses). If this remedy fails too, the third layer of consumer protection is the National Assurance Fund (the Fund) which organises alternative tuition or a refund to students. (ESOS Evaluation Report, 7.8)

Membership of a Tuition Assurance Scheme
Registered providers must at all times be a member of a Tuition Assurance Scheme (s. 22(1)(a)) unless exempted by the regulations (s.22(3))

Providers who are exempt from the requirement to be a member of a Tuition Assurance Scheme are:

For subsection 22(3) of the Act, the following providers are exempt from the requirements of section 22 of the Act:

• a provider who, under subsection 24 (2) of the Act, is exempt from the requirement to pay annual Fund contributions;
• a provider who has a bank guarantee:
  • that, in the circumstances mentioned in section 27 of the Act, indemnifies the provider for amounts that the provider may be required to pay under section 28 or 29 of the Act; and
  • that is approved by the Minister;
• a provider who is a body corporate and who has an indemnity agreement, in writing:
  • with another body corporate that is a parent organisation of the provider and is incorporated in Australia; and
  • that provides either of the following:
  • that is approved by the Minister;

    (A)	in the circumstances mentioned in section 27 of the Act, the parent organisation indemnifies the provider for amounts that the provider may be required to pay under section 28 or 29 of the Act;
    (B)	if the provider cannot provide a course for which a student has paid the provider, the parent organisation will arrange, and pay for, provision of a suitable alternative course to the student; and

• a provider who the Minister believes on reasonable grounds should not be expected to become a member of a tuition assurance scheme established in accordance with these Regulations. (ESOS regulations, 3.11)

If exempt, annual notification to DEST

A provider who is exempt from the requirements of section 22 of the Act under paragraph 3.11 (b) or (c) must, within 28 days after the end of a calendar year, give the Secretary and the Fund Manager:

• written notice explaining why the provider is exempt from the requirements of section 22 of the Act; and
• a copy of the bank guarantee or indemnity agreement mentioned in paragraph 3.11 (b) or (c). (ESOS Regulations, 3.16)

Overview

Section 45 of the Act provides for the establishment of the ESOS Assurance Fund. The purpose of the Fund is to protect the interests of overseas students and intending overseas students of registered providers by ensuring that the students are provided with suitable alternative courses, or have their course money refunded, if the provider cannot provide the courses that the students have paid for.

The Secretary is required to appoint a Fund Manager to perform a range of functions, including:

• holding the money standing to the credit of the Fund on trust for the benefit of overseas students and intending overseas students of registered providers, for the purpose of the Fund;
• managing the Fund in a way that ensures it is able to meet all its liabilities from time to time;
• collecting annual Fund contributions and special levies from providers; and
• arranging alternative courses for students, and to make payments from the Fund, when required to do so.

Under section 54 of the Act, a Contributions Review Panel (CRP) consisting of 10 people is established to determine the contributions criteria and to hear and determine appeals by providers against determinations of their contributions. It is the responsibility of the Fund Manager to propose to the Panel the criteria for determining the amounts of annual Fund contributions for providers; and to determine the amounts of annual Fund contributions for providers in accordance with those criteria.

If at any time the Fund Manager considers that the Fund does not have enough money to meet its current or future liabilities, the Fund Manager may require all registered providers who are liable to pay an annual Fund contribution for that year to pay a special levy to the Fund Manager. This is subject to the approval of the Panel. (ESOS Evaluation Report, 3.2.5)

Purpose of ESOS Assurance Fund (http://esosassurancefund.com.au/)

Provide alternative courses or fee refunds in cases where providers are not able to provide courses that have been paid for (s. 46)

ESOS Assurance Fund Contributions
Registered providers are required to pay annual fund contributions unless exempt under the ESOS Act 2000 and ESOS Regulations 2001.

Providers who are exempt from the requirement to pay Annual Fund contributions are:

• A provider that is administered by:
  • a council of a TAFE college established under the VET Act 1990; or
  • governing board established under the Adult, Community and Further Education Act 1991
  • a State education authority
• A provider who is receiving Commonwealth recurrent funding for provision of education and training, other than one excluded by the Regulations
• A provider who is receiving all fees in arrears at the completion of full course and has a payment in arrears agreement with each student
• A provider is receiving all fees in arrears at the completion of part of the course and the provider has a credit transfer agreement with another provider and a payment in arrears agreement with the student as per ESOS Regulations 2001.

Exemptions do not apply to any private corporate body established in connection with an exempt provider. (Reg 3.18, s. 24(2))