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Frequently asked questions regarding designated accounts

How does the requirement to place the initial study period fees into a designated account work?
Providers who are in receipt of Commonwealth Recurrent Funding are exempt from the requirement to place prepaid tuition fees into a designated account. What does in receipt of Commonwealth Recurrent Funding mean?
Are there likely to be any exceptions to designated bank account requirements for pathway providers that have been selected to participate in the visa streamlining program?
When is a provider allowed to draw down money from the designated prepaid tuition fee account?
Is the 'designated account' an actual separate bank account? Or can it be a single bank account with multiple accounts in provider's database/accounting systems?
Can the designated account have other student's tuition fees in it?
Can a CRICOS provider have a single designated account for a number of their providers or locations?
Are non-exempt providers required to pay interest to students on the money that has been deposited in a designated account?


How does the requirement to place the initial study period fees into a designated account work?

This measure requires all providers, except those administered by a state education authority or in receipt of recurrent Commonwealth funding to place all pre-paid tuition fees into a designated account. This account can only be drawn down when the student commences the course. Providers must establish a mechanism for keeping pre-paid tuition fees separate from day-to-day operating expense accounts, so that if a refund is payable before the student commences, the refund can be made in full and in a timely way without impact on the financial operations of the business or recourse to the tuition protection system.

The intention is that initial pre-paid tuition fees held in this account will not be available for the payment of debts of the provider including if the provider goes into administration. A provider must not mix pre-paid tuition fees held in a designated account with other money. Strong penalties will be imposed for non-compliance with this requirement. To minimise the regulatory burden, no routine regular reporting on this requirement by the provider is envisaged, but providers will be required to demonstrate maintenance of the designated accounts on request by the regulator.

Providers who are in receipt of Commonwealth Recurrent Funding are exempt from the requirement to place prepaid tuition fees into a designated account. What does in receipt of Commonwealth Recurrent Funding mean?

A provider receipt of Commonwealth Recurrent Funding is one that is entitled to receive funds under the law of the Commonwealth for recurrent expenditure for the provision of education or training. Providers such as private schools, TAFEs, Universities receive recurrent government funding.

Are there likely to be any exceptions to designated bank account requirements for pathway providers that have been selected to participate in the visa streamlining program?

No. There are no exemptions for pathway providers unless the provider is of the kind exempt under the legislation. Exempt providers include:

  • a provider administered by a State education authority
  • any provider that is entitled to receive recurrent Commonwealth Government funding
  • any other provider specified in the regulations

The legislation also makes it clear that any private corporate body established in connection with a provider exempt under the legislation is not by virtue of that connection an exempt provider.

When is a provider allowed to draw down money from the designated prepaid tuition fee account?

Providers are able to draw down on an international student's prepaid tuition fees in the designated account once the student begins the course. Providers administered by a state education authority or eligible to receive recurrent Commonwealth funding are exempt from this requirement.

Is the 'designated account' an actual separate bank account? Or can it be a single bank account with multiple accounts in provider's database/accounting systems?

The designated account should be a separate bank account within the ordinary meaning of 'account'. Providers must establish a mechanism for keeping pre-paid tuition fees separate from day-to-day operating expense accounts, so that if a refund is payable before the student commences, the refund can be made in full and in a timely way without impact on the financial operations of the business or recourse to the tuition protection system.

Can the designated account have other student's tuition fees in it?

Yes. There is no limit on the amount of money kept in the designated account. The legislation only requires that at all times there is a sufficient amount in the account to repay all prepaid tuition fees for students who have not yet commenced their course.

Can a CRICOS provider have a single designated account for a number of their providers or locations?

For example one CRICOS provider may have several RTOs operating across a number of locations. Could the pre-paid tuition fees for not yet commenced students from several of these providers be kept in a single account?

It is the department's view that as long as the designated account is entirely separate from the providers' operating accounts, the account will meet the requirements of the legislation. However, each provider needs to be able to demonstrate to the regulator, if required, that the funds are sufficient to repay all non commenced students at all locations.

Are non-exempt providers required to pay interest to students on the money that has been deposited in a designated account?

No. There is no requirement on providers to pay interest to students on the amounts deposited in designated accounts.