House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Education, the Honourable Dan Tehan MP)

OUTLINE

The principal purpose of the Education Legislation Amendment (Up-front Payments Tuition Protection) Bill 2020 ( Bill ) is to amend the Tertiary Education Quality and Standards Agency Act 2011 ( TEQSA Act ) and the Higher Education Support Act 2003 ( HESA ) to implement the expansion of the Australian Government's Tuition Protection Service ( TPS ) to include domestic up-front fee paying higher education students. The Bill ensures domestic up-front fee paying students and students who access FEE-HELP or HECS-HELP assistance ( HELP students ) at private higher education providers receive the same tuition protection. The Bill will be introduced with the Higher Education (Up-front Payments Tuition Protection Levy) Bill 2020 ( Levy Bill ).

Tuition protection aims to ensure students are protected and supported in the event that their provider defaults - that is, where the student has not withdrawn from a unit of study and either:

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the provider fails to start to provide a unit to the student on the day on which the unit was scheduled to start; or

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the provider ceases to provide a unit to the student on a day after the unit starts but before it is completed.

From 1 January 2020, TPS arrangements were expanded to students accessing VET Student Loans, FEE-HELP and HECS-HELP assistance at private education providers through the Education Legislation Amendment (Tuition Protection and Other Measures) Act 2019. The proposed tuition protection arrangements in this Bill are modelled on the TPS arrangements for HELP students at a private higher education provider under HESA, and international students under the Education Services for Overseas Students Act 2000 ( ESOS Act ). For many years now, Australia has been a world leader in supporting international students studying in Australia in instances of provider closures.

The expansion of the successful TPS model to domestic students enrolled at private higher education providers who pay their tuition fees up-front is part of the Government's ongoing commitment to safeguarding students who are affected by a provider default, and providing the same protection as HELP students.

The Bill provides new tuition protection arrangements for domestic up-front fee paying students, which will:

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rename the 'HELP Tuition Protection Director' to be the 'Higher Education Tuition Protection Director' ( TP Director ) to have a single TP Director administering tuition protection for domestic up-front fee paying students and HELP students across the higher education sector. The TP Director is the same person as the independent TPS Director appointed under the ESOS Act;

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rename the 'HELP Tuition Protection Fund Advisory Board' to be the 'Higher Education Tuition Protection Fund Advisory Board' ( Advisory Board ), to have the same Advisory Board providing support, advice and recommendations to the TP Director on tuition protection arrangements for domestic up-front fee paying students and HELP students. The Advisory Board has the same members as those appointed to the TPS Advisory Board under the ESOS Act, who are a combination of sector and government representatives to ensure there is a diverse range of views factored into decision making;

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require private higher education providers to contribute annual levies, commensurate with their size and risk, under the Levy Bill. The levy system ensures the new arrangements are sustainable and can respond to trends in the higher education sector;

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rename the existing 'HELP Tuition Protection Fund' established under subsection 167-1(1) of HESA, to be the 'Higher Education Tuition Protection Fund'. This special account will be used to make payments in relation to the arrangements to support affected domestic students in the higher education sector, regardless of whether they pay their tuition fees up-front or defer them through a HELP loan and for the remuneration and allowances of the TP Director and Advisory Board;

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impose a new condition of registration on registered higher education providers under the TEQSA Act to comply with the new tuition protection requirements, including the requirement to keep records and provide information to the Secretary to support the administration of tuition protection;

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allow the Minister to make the Up-front Payments Guidelines ( Guidelines ) to prescribe matters relevant to the administration of tuition protection;

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provide assistance to domestic students who may complete their studies with another provider or may have their tuition fees that were paid up-front refunded for units of study that fail to commence or commenced but were not completed due to the provider's default:

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students will be able to choose between continuing their studies in a suitable replacement unit or course with a replacement provider (if available), or a refund of the amount of tuition fees paid up-front by the student for the affected unit. This reflects the small and diverse nature of the sector, where it can be difficult for a student to find a suitable replacement unit or course;

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require providers to discharge their tuition protection obligations upon default in relation to their affected students, and if not discharged then the TP Director must assist the affected students. This requirement is also being included under the existing TPS arrangements for HELP students through amendments to HESA to ensure the tuition protection process is consistent for all affected higher education students, regardless of if they pay their tuition fees up-front or defer them through a HELP loan;

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impose obligations on defaulting providers to notify the TP Director and students of the default in a timely manner, and cooperate with the TP Director;

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impose obligations on replacement providers to enrol students as soon as practicable, give the student course credits in recognition of their prior completed studies as appropriate, and not charge students for the replacement unit of the replacement course. These requirements facilitate efficient and fair treatment of students to allow them to continue their studies with minimal disruption;

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authorise the collection, use and disclosure of personal information between relevant parties (e.g. Department of Education, Skills and Employment ( Department ), TP Director and Tertiary Education Quality and Standards Agency) for the purposes of performing functions or exercising powers under the TEQSA Act and HESA as it relates to tuition protection;

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apply the Regulatory Powers (Standard Provisions) Act 2014 ( Regulatory Powers Act ) to new Part 5A (about tuition protection) of the TEQSA Act.

The Bill provides for the new tuition protection arrangements to commence on 1 January 2021. Consistent with previous tuition assurance arrangements, the proposed arrangements do not apply to Table A providers (i.e. public universities), TAFEs or Government funded providers and students enrolled with them are not included in the scope of TPS, since those providers are assessed to have a low risk of default. This does not prevent Table A providers, TAFEs or Government funded providers from enrolling displaced students as replacement providers. However, the Minister will have the power to determine that the new tuition protection requirements apply or do not apply to specific registered higher education providers having regard to matters set out in proposed section 62B of the TEQSA Act (explained further below in the detailed explanation).

Expanding the Australian Government's TPS to domestic up-front fee paying students will also ensure that private higher education providers are no longer required to maintain burdensome and costly arrangements to cover these students. Instead, they will pay levies to the Australian Government's managed TPS fund.

FINANCIAL IMPACT STATEMENT

The measure to expand the Australian Government's TPS to cover domestic students that pay for their tuition fees up-front at private higher education providers through the Bill and Levy Bill is expected to generate $0.1 million in underlying cash and fiscal balance terms over the forward estimates.