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New payment scheme in Australia “harming enrolments”

A new tuition protection scheme (TPS) in Australia is deterring education agents from sending students to the country as well as placing financial restraints on providers, sources have told The PIE News. However, others in the sector defend the scheme in intent, if not practice, and suggest Australian providers need to adapt.

Agents must wait longer for commission, making them more likely to send students to other countries

A major concern about the TPS, which came into effect July 1, is that overseas students can only pay for 24 weeks of a course in advance, and must then pay for further weeks of study once on campus and just two weeks before their next study period begins.

The aim is to ensure providers continue offering a quality service but it also means agents must wait longer for commission, making them more likely to send students to other countries.

Suli Perez of Aussintech, Colombia, said: “It is pretty annoying, because if the student goes for more than 24 weeks we are paid just 50% of the commission then have to wait at least three or four months to receive the other 50%.

“If the students want to go for longer, we may advise them to go to Canada, the UK or New Zealand, although the problem is they are not allowed to work as easily.”

Arun Jacob, of India’s Array Globe, said he would continue to send students to Australia where they expressed “an explicit need to go” and not dissuade anyone.

However, he said, “Unfortunately a lot of agents do not work with the same ethics and I am certain they will start dissuading students from going to Australia to protect their own monetary interests.”

“If the students want to go for longer we may advise them to go to Canada, the UK or New Zealand”

In a parallel gripe, education providers must now hold funds in reserve – as well as paying into an industry tuition protection fund – to cover student fees in case they go bust; something Ian Pratt, managing director of the Lexis English chain, considers onerous and ineffective.

“The TPS changes ‘reform’ a system that was perfectly functional before… School cash flow is [now] very seriously restricted and it seems that this will do nothing but ensure more school failures, leading to yet more burden upon the TPS fund, which in turn will mean that schools will need to contribute more to it,” he said.

Others say they have not suffered from the changes or are successfully adapting. Most agree that the scheme serves students well, which in itself promises “reputational benefits”, according to Sue Blundell of English Australia.

“The intent of the legislation is to protect students – ultimately that has to be our goal”

“The intent of the legislation is to protect students – ultimately that has to be our goal as an industry, for both providers and agents. We may not agree with how the legislation delivers this protection, however the legislation is now in effect and the industry has to work with it,” she said.

She said the limit on pre-paid fees had come from the government’s experience with the collapse of the GEOS language chain in 2010, when large numbers of students who had paid in advance for more than 40 weeks of tuition lost their money. “This damaged the reputation of the agents involved, as well as GEOS itself,” said Blundell.

Universities Australia did not criticise the scheme, saying the changes needed time to “bed down”, and said it was working to “ensure compliance in a collaborative manner”.

A spokesperson for the Department of Industry, Innovation, Science, Research and Tertiary Education defended the upfront fees, saying providers could cover the deferred commission. “The legal framework places no restriction on the ability of providers to pay commissions to agents,” they said.

Pratt however remains unconvinced. “We’ve seen an absurd number of regulatory changes… While some tweaks were most definitely required, the ham-fisted approach taken by the Gillard government has simply led to more and more school failures and an extremely unattractive trading environment,” he said.

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