The balance of the Overseas Students Tuition Fund (OSTF), the fund that the International Tuition Protection Service (TPS) Levy is paid into, was $47.8 million at the end of June 2024. Provider closures are inevitable, according to the Independent Tertiary Education Council Australia (ITECA), which has previously predicted that up to 300 colleges will close, begging the question, could the TPS go broke?
The answer is yes, according to analysis undertaken by Claire Field, Principal, Claire Field & Associates. She predicts that the $47.8m “will not be enough”.
Field’s analysis
In her analysis, Field used historical precedents, assumed 10% of students studying with a private VET or higher education provider will be impacted, and assumed that students will have paid very low fees or were nearing the end of their course.
Based on her assumptions, with 394,200 private VET and higher education students in Australia at the end of July 2024, Field suggests that the TPS would be required to fund $49.3m in unpaid tuition fees (to receiving providers of transferred students and to students as refunds where a provider cannot be found for them to continue their studies). Meaning, that the TPS would be short by $1.5 million.
Government anticipates closures
In anticipation of a possible run on the TPS, it appears that TPS levies are set to increase, as provider closures have also been anticipated by the Government. The Australian Government Actuary (AGA) has recommended that the target range of the OSTF be increased in 2025 “due to increased international student population and higher forecasted closures than previous few years”.
The AGA provides a recommended target range for the OSTF to ensure there are sufficient funds in the event of a large provider closure or multiple provider closures. The current target range for the OSTF is $35-60 million with a mid-point of $47.5 million. AGA has recommended that this be increased in 2025 to a mid-point of $50 million, with a range of $40-60 million.
2025 TPS Levy
According to the timeline for the 2025 International TPS Levy provided during sector consultations about the draft levy, the TPS Advisory Board decided on the 2025 international levy last week (16 October) and the final advice letter will be published on the TPS website in late October. One to watch out for.
What about caps?
A discussion about provider closures wouldn’t be complete without consider two aspects that relate to enrolment caps.
If there are to be widespread provider closures, as anticipated, there will be implications for providers who take on students to complete their course. If students are transferred to another provider due to a provider closure, will those students count towards that provider’s cap? And if so, what happens if that causes that provider to reach or exceed their cap, assuming they have other applicants in the pipeline?
Surely the Government will need to make allowances so that these students do not count towards a provider’s cap. But then, how will the systems manage these transfers.
The second aspect to consider is what happens to the caps of the provider that closes. Will these caps be made available to other providers to use? Probably not. Even less new international students in the system will be welcomed by a government desperate to reduce net overseas migration figures (including whichever party is in power after the election).
Not much left in the kitty
Even if the TPS levy increases to AGA’s midpoint of $50 million, assuming Field’s anticipated figure of $49.3 million, that doesn’t leave much in the TPS kitty for future provider closures.
Additional background on the TPS
An assumption has been made that most readers of The Koala News will be aware of the TPS. But here’s a summary for those not as familiar:
- The TPS was initially established in 2012 as an international student tuition protection scheme under the Education Services for Overseas Students Act 2000.
- In the event of a provider closure, the TPS assists students to find options for completing their course, or if that isn’t possible, then students may apply for a refund of the ‘unspent’ tuition fees a student has paid to their provider.
- If a student receives a refund, this is taken from the OSTF referred to above. As is any ‘unspent’ tuition fees that may be transferred by the TPS to an alternative provider.
- An annual tuition protection levy is paid by international education providers into the OSTF. The is calculated based on an education provider’s size and risk of closure.
- The Australian Government waived the 2022 international TPS levy as a COVID-19 pandemic relief measure for CRICOS providers.
- More information about the TPS, including how the levy is calculated, is available on the TPS website.
