Higher Education (Up-front Payments Tuition Protection Levy) Act 2020

Leviable provider is the central trigger. It means a registered higher education provider to which Part 5A of the Tertiary Education Quality and Standards Agency Act 2011 applies. Part 5A deals with tuition protection for students who pay up‑front, so the levy targets precisely those providers. A provider that never takes up‑front payments from domestic students would likely not be a leviable provider, but the Act does not explicitly exempt them if they still fall within Part 5A of TEQSA. Up‑front payment is defined by reference to the TEQSA Act , essentially payments made directly by a domestic student for a unit of study, rather than through the HELP loan scheme. A unit of study has two definitions: for providers that are also higher education providers under the Higher Education Support Act 2003, it adopts that Act’s definition; for others, it means a subject or unit, or the entire course if not composed of subjects. Total up‑front fee paying students is the number of domestic students for whom the provider received one or more up‑front payments during the year. The Act requires that this count exclude any student who would also be a total HELP student under the HELP levy Act. This exclusion prevents double counting across the two tuition protection levy regimes , important because the HELP levy deals with fee‑help students. A new provider is defined simply as a leviable provider not registered at any time in the previous calendar year. That status matters because new providers get zero risk rated premium and special tuition protection components for their first year, reducing their total levy burden. The administrative fee component has a flat amount and a per‑student amount. Both are capped by statute: $325 and $31 respectively, indexed annually from 2022. The Minister determines the actual amounts each year by legislative instrument, but must not exceed those caps. The risk rated premium component applies only to established providers. It uses a multi‑step method: first multiply the previous year’s up‑front student count (excluding HELP students) by a per‑student amount; then multiply the previous year’s total up‑front payments by a percentage; add those two sums; then calculate risk factor values (between 0 and 10 each) for the provider; sum those values and add 1; multiply the base sum by that risk multiplier. So a provider with a risk factor value of 3 pays 4 times the base sum (3 + 1). The special tuition protection component is simply a percentage of all up‑front payments received in the previous year. The Director sets both the per‑student amount, the percentage for step 2, and the risk factors by legislative instrument, with Treasurer approval required before making the instrument. The Minister and Director must both have regard to the sustainability of the Higher Education Tuition Protection Fund. That is the only explicit criterion for the Minister (though they may also consider any other matter), while the Director must also have regard to any advice from the Advisory Board.

The levy directly affects registered higher education providers that accept up‑front payments from domestic students. That includes universities, non‑university higher education providers, private colleges, and any other body registered with TEQSA and subject to Part 5A of that Act. The levy does not apply to providers that only enrol students under the HELP loan scheme or that only take international students, because the definition is confined to domestic students making up‑front payments. However, any provider that takes even one up‑front payment from a domestic student during a year is a leviable provider for that year, provided they are a registered higher education provider. That means small specialist colleges and institutes are captured, not just large universities. New providers enjoy a lighter first‑year burden (only the administrative fee component), but from the second year onward they face the full three‑component levy. The levy is imposed on the provider itself, not on students or staff. Indirectly, the levy affects domestic students who pay up‑front: the cost of the levy is a compliance cost for providers, which may be passed through as higher fees or reduced services. Because the risk rated premium component increases with risk factor values (including both the up‑front fee student numbers and the total up‑front payments), providers with larger up‑front cohorts or higher‑value payments bear a proportionally larger levy. The risk factors themselves are set by the Director and may include financial health indicators, defaults, or other metrics , those risk factors will disproportionately affect providers perceived as higher risk, which may include smaller private colleges or those with a history of student complaints. The Act also affects the Higher Education Tuition Protection Director, who must determine the key parameters for the risk rated and special tuition protection components each year. The Higher Education Tuition Protection Fund Advisory Board is consulted. The Treasurer must approve the Director’s legislative instruments. The Minister sets the administrative fee amounts. Students studying under the HELP scheme are not counted in the levy calculations for up‑front payments (the Act explicitly excludes HELP students from the count). However, providers that have a mix of up‑front and HELP students must track which students fall into each bucket, adding an administrative burden. The Up‑front Payments Guidelines may exempt entire classes of providers from one or more components , that power could be used to carve out very small providers, religious institutions, or other categories, creating winners and losers depending on the ministerial guidelines.

The primary duty is to pay the up‑front payments tuition protection levy when due. The levy is imposed by section 6 on a body that is a leviable provider at any time during a year. The amount is the sum of three components, each calculated according to the prescribed formulas. Providers must determine their liability each year, including correctly calculating their total up‑front fee paying students for the previous year, and excluding any student who also qualifies as a total HELP student under the HELP levy Act. They must also know their total up‑front payments received in the previous year (for the risk rated premium and special tuition protection components). Providers have a right to rely on the legislative instruments made by the Minister and the Director: the amounts and percentages set out in those instruments are the binding numbers. They also have a right to be exempted if they fall within a class prescribed by the Up‑front Payments Guidelines , though those guidelines are made by the Minister under the TEQSA Act, not under this Act. The Act does not set out a payment date, penalty for late payment, or collection mechanism. It creates the levy but leaves those operational matters to other Acts or regulations. The regulations (section 15) may prescribe matters required or permitted by the Act or necessary for giving effect to it. That could include payment dates, returns, and recovery provisions. The Minister and Director have duties: the Minister must determine administrative fee amounts for 2021 before 1 August 2021, and may determine them for later years; the Director must determine the risk rated premium and special tuition protection parameters before 1 August each year, and must have regard to Fund sustainability and Advisory Board advice. The Treasurer must approve the Director’s instruments. Providers do not have an explicit right to challenge the risk factor values or the percentage determinations directly under this Act; any challenge would likely be via judicial review of the legislative instruments as delegated legislation. New providers have the right to pay only the administrative fee component (and only the flat amount, not the per‑student amount, because section 8(1) sets the new provider’s administrative fee component as the amount for paragraph (2)(a) alone). However, the Act does not say explicitly that new providers do not pay the per‑student component , it says their component is ‘the amount determined for the purposes of paragraph (2)(a) for the year’. That is the flat amount only. So the per‑student component (paragraph (2)(b)) does not apply to new providers. That is a significant concessional treatment.

This Act contains no penalty provisions. It does not set a penalty for non‑payment, late payment, or failure to calculate the levy correctly. It does not create an offence. The only enforcement mechanism implied is that the levy is imposed by Parliament, so non‑payment would be a debt due to the Commonwealth. Collection and recovery are likely governed by other legislation , probably the Higher Education Support Act 2003 or the Public Governance, Performance and Accountability Act 2013. The Act itself does not provide for interest, late fees, or garnishee orders. The absence of penalty provisions in the Act means that the consequences of non‑payment are not directly stated. However, if the levy is a tax (the Act is titled a ‘Levy Act’ and contains a standard ‘does not impose tax on property of a State’ clause), it may be recoverable under the general law of debts. The Commonwealth could sue for the amount. There is also potential for the TEQSA Act to impose sanctions: a provider that fails to pay the levy might be considered non‑compliant with its registration obligations, which could lead to sanctions or loss of registration. The Act’s explanatory material (from the second reading speech) likely ties this levy to the tuition protection scheme , non‑payment would undermine the Fund’s sustainability and could lead to administrative consequences for the provider. The Act also does not set a maximum levy amount; it only caps the administrative fee components at $325 and $31 (indexed). The risk rated premium and special tuition protection components are uncapped in dollar terms, because they depend on the provider’s own student numbers and payment amounts, multiplied by factors set by legislative instrument. A large provider with many up‑front students and high payment values could face a very large levy. The only limit is that risk factor values are capped at 10 per factor (so the multiplier is at most 11). But the base amounts can be large. The Act does not provide for refunds or reductions if the provider ceases operations mid‑year. The levy is imposed for a year if the provider is a leviable provider at any time during that year , so even a provider that stops taking up‑front payments partway through a year still owes the full year’s levy. There is no pro rata calculation. That creates a perverse incentive: a provider might be better off not becoming a leviable provider at all if they only take a few up‑front payments early in the year.

This Act is part of a legislative package. It is designed to commence at the same time as the Education Legislation Amendment (Up‑front Payments Tuition Protection) Act 2020, which amended the TEQSA Act to introduce Part 5A. That Part 5A defines which providers are leviable providers and establishes the Up‑front Payments Guidelines. The levy under this Act funds the Higher Education Tuition Protection Fund, which is established under the Higher Education Support Act 2003 (section 167‑1). The Higher Education Tuition Protection Director and the Higher Education Tuition Protection Fund Advisory Board are also creatures of that Act. So this Act relies on HESA for the Fund and governance structures. The definition of unit of study cross‑references both the Higher Education Support Act 2003 and the Tertiary Education Quality and Standards Agency Act 2011, depending on the provider type. The definition of domestic student and Australian course of study are from the TEQSA Act. Critically, this Act interacts with the Higher Education Support (HELP Tuition Protection Levy) Act 2020. The two levy Acts are parallel: one targets up‑front payment students, the other targets HELP loan students. The same student cannot be counted under both regimes for the same provider , sections 8(3) and 11(3) of this Act prevent double counting by excluding from total up‑front fee paying students any student who would also be a total HELP student under the other Act. That means providers must internally classify students and ensure they do not duplicate counts. The Up‑front Payments Guidelines are made under section 26B of the TEQSA Act, not under this Act. Those guidelines can exempt classes of providers from one or more levy components. That gives the Minister a broad power to adjust the levy burden without amending this Act. The regulations power under section 15 of this Act is general, allowing prescription of matters required or permitted by the Act or necessary for its operation. That could be used to fill gaps in collection or enforcement. The Act is also subject to the Constitution , specifically section 114, which prohibits the Commonwealth from taxing property of a State. Section 4 of this Act expressly disclaims any intention to impose tax on State property, meaning State‑owned universities are not exempt from the levy as such, but the levy cannot apply to property owned by the State. That is a standard savings clause. The Act binds the Crown in all capacities (section 3), so both Commonwealth and State Crown entities are subject to the levy if they are leviable providers. However, that may conflict with the property‑tax exception , a State‑owned university might argue that the levy is in substance a tax on its operations, which are its property. The courts would need to interpret section 4 in light of section 114. No cases have arisen yet.

The Act was originally enacted as Act No. 102 of 2020, assented to on 20 November 2020. The commencement provision ties the whole Act to the commencement of the Education Legislation Amendment (Up‑front Payments Tuition Protection) Act 2020, which was 1 January 2021. There have been no amendments to the Act since its commencement. The Act has been in force for several years, but no amending legislation has been passed. The tables in the printed Act note that commencement details may be inserted in column 3 of the table, and that column is not part of the Act , but no amendments are recorded. The Act’s small size and specific purpose (imposing a levy to fund a specific protection scheme) suggest it may remain static unless the overall higher education tuition protection system is restructured. However, the Minister and Director have significant delegated powers to adjust the levy amounts and risk factors each year, so the Act itself does not need frequent amendment. The indexation provisions in section 10 automatically adjust the capped administrative fee amounts by CPI each year, further reducing the need for legislative amendment. The lack of amendment history means the Act has operated as enacted. Potential future amendments could include raising the caps on administrative fee components (which are currently $325 and $31 indexed), introducing new components, or expanding the definition of leviable provider. Any amendment would require new legislation. The Act’s original second reading speech, made in the House of Representatives on 26 August 2020 and in the Senate on 10 November 2020, provides context but is not part of the Act. That speech would indicate the policy rationale: protecting students who pay up‑front from provider default, and ensuring the Fund is sustainable. The Act itself does not contain review provisions or sunset clauses. It continues indefinitely unless repealed.

As of the date of the Act’s text (which is the version as originally enacted), there are no reported cases interpreting the Higher Education (Up‑front Payments Tuition Protection Levy) Act 2020. The Act is relatively new and specific. Litigation could arise on several grounds. First, a provider might challenge the validity of a legislative instrument made under sections 9 or 13, arguing that the Minister or Director failed to have regard to the sustainability of the Fund or that the risk factors are arbitrary or discriminatory. Any such challenge would be under the Legislation Act 2003 for judicial review of delegated legislation. Second, a provider might argue that the levy is an unconstitutional tax on property of a State (section 114) , particularly if a State‑owned university is a leviable provider. Section 4 of this Act attempts to avoid that issue, but the line between a tax on property and a tax on an activity can be contested. The High Court might need to decide whether the levy is a tax on the provider’s receipts (which might be property) or merely a regulatory charge. Third, a dispute could arise over the proper calculation of total up‑front fee paying students, especially the exclusion of students who are also HELP students. Providers and the Director might disagree on how to define ‘would also fall within the definition of total HELP students’. That definition is in the Higher Education Support (HELP Tuition Protection Levy) Act 2020, which may itself be ambiguous. The absence of litigation does not mean the Act is immune from challenge. The risk factors (section 13) are particularly vulnerable to legal challenge because they are determined by the Director, not the Parliament, and they directly affect the cost of compliance. If a risk factor is based on data the provider disputes, or if the method for calculating the risk factor value is unclear, a provider might seek review. The instrument‑making process includes a requirement for Treasurer approval, which adds a layer of political accountability but does not guarantee legal validity. The Act’s brevity and reliance on delegated legislation mean that the real legal action will be in the instruments, not in the Act itself. No cases have been identified.

The first gotcha is that the levy applies for a whole year even if the provider only took one up‑front payment on one day. Section 6 imposes levy on a body if it is a leviable provider at any time during the year. There is no de minimis exception. A provider that inadvertently receives a single up‑front payment from a domestic student (for example, a late fee or an overpayment) might trigger full liability for all three components (in the second and subsequent years). The risk rated premium component uses the prior year’s data, so a small event in year one can snowball into a large levy in year two. New providers get a one‑year grace period on the risk rated and special tuition protection components, but they still must pay the administrative fee (flat amount). The Act does not say the new provider exemption applies for only one year , it applies for the year in which the provider is a new provider. That status is defined as not having been registered at any time in the previous year. So if a provider started mid‑year, it is new for that year but may also be considered a new provider for the following calendar year if it was not registered at any time in the previous year? Actually, the definition: new provider, for a year, means a leviable provider that was not a registered higher education provider at any time during the previous year. So if a provider first registered on 1 July 2021, then for the year 2021 it is new (since it was not registered at any time during 2020). For the year 2022, it was registered in 2021, so it is not a new provider. So the new provider status lasts only one calendar year. That is a gotcha for providers that start late in the year , they get the new provider benefit for the remainder of that year only, and must pay full levy the following year. The exclusion of HELP students from the up‑front student count (section 8(3) and 11(3)) requires providers to track students who are taking both up‑front and HELP loans across different units. If a student pays for one unit up‑front and another via HELP, that student is a total up‑front fee paying student for the up‑front unit, but if they also would be a total HELP student for that previous year, they are excluded from the up‑front count. The wording is ‘disregard a student if that student would also fall within the definition of total HELP students … for that previous year’. That means if a student has any HELP activity in the previous year (not necessarily the same provider), they may be excluded. Providers cannot simply rely on their own records; they may need to cross‑check with HELP system data. The risk factor values are not set in the Act , they are set by legislative instrument each year. That creates uncertainty. A provider cannot forecast its levy accurately without knowing the risk factors, which are determined shortly before the year starts (by 1 August). The risk factor values can be between 0 and 10 each. If multiple risk factors apply, the multiplier (sum of risk factor values plus 1) can be up to 11 (if one factor is 10) or more if multiple factors are allowed. The Act says ‘one or more risk factors’ , so potentially many factors, each up to 10. The multiplier could be enormous, vastly increasing the base levy. The Act does not cap the total risk factor sum. That is a significant exposure for providers deemed high risk. The special tuition protection component is a percentage of all up‑front payments received, not just the total number of students. That percentage could be set by the Director at any level (including zero, under section 13(2)). A provider with high‑value courses (such as medical degrees) could face a large component even if they have few students. The Act does not provide for any right to a hearing before the Director sets risk factors. The Director must have regard to sustainability of the Fund but not to individual provider circumstances. A provider that believes its risk factor is unfairly high has no statutory avenue to challenge it within the Act. Judicial review is available but costly. Finally, the levy is not a tax deductible expense for the provider? That depends on tax law, not this Act. But it is an operating cost that reduces profitability, particularly for private providers that operate on thin margins.

To comply, a higher education provider must first determine whether it is a leviable provider. That requires checking if it is a registered higher education provider and if Part 5A of the TEQSA Act applies to it. If the provider takes any up‑front payments from domestic students, it is almost certainly covered. If it takes no such payments, it may still be a leviable provider if Part 5A applies; the Act does not provide a carve‑out for providers that choose not to accept up‑front payments. However, the Up‑front Payments Guidelines may exempt classes , so checking those guidelines is essential. The provider must then calculate its levy for each calendar year. For a new provider in its first year, the levy is simply the administrative fee component: the flat amount determined by the Minister for that year (capped at $325 indexed). No per‑student amount applies. For established providers, the levy is the sum of three components. The administrative fee component requires knowing the total up‑front fee paying students for the previous year, excluding any student who would also be a total HELP student under the HELP levy Act. The provider must maintain accurate records of each domestic student’s payment method and whether they took any HELP loans. That likely means linking student financial data with HELP reporting. The per‑student amount is multiplied by that count. The flat amount is added. The risk rated premium component requires a multi‑step calculation. Step 1: multiply total up‑front fee paying students (same exclusion) by the per‑student amount set by the Director (for the current year). Step 2: multiply total up‑front payments received in the previous year by the percentage set by the Director. Step 3: add those two results. Step 4: work out the risk factor values for the provider based on the risk factors determined by the Director. The risk factors may be based on financial health, student outcomes, size, or other data , the provider must know which factors apply and obtain the values from the legislative instrument. Step 5: sum the risk factor values and add 1. Step 6: multiply the result of Step 3 by the result of Step 5. The special tuition protection component is simpler: total up‑front payments received in the previous year multiplied by the percentage set by the Director. All three components require using the instruments made for the current year. The instruments are published as legislative instruments on the Federal Register of Legislation. Providers should monitor the Director’s and Minister’s instruments for the relevant year , the amounts change annually, with indexation or new determinations. The indexation formula uses CPI and applies automatically if the Minister does not make a new determination. Providers must be prepared for variation. Payment of the levy is not addressed in this Act. The collection mechanism is likely under the Higher Education Support Act 2003 or the regulations. Providers should expect to be invoiced by the Higher Education Tuition Protection Director or the Department. The Act does not specify a due date. Providers should keep records of their calculations for at least seven years in case of audit. They should also review the Up‑front Payments Guidelines for any exemptions they might qualify for , if they fall into an exempt class, they must apply or notify the Director. Lastly, providers must ensure they do not double count students who also appear in the HELP levy regime. The exclusion is mandatory and applies to both the administrative and risk rated components. Failure to exclude correctly could lead to overpayment (recoverable) or underpayment (with risk of recovery action). The safest approach is to maintain a student‑level database that flags each domestic student as either HELP only, up‑front only, or both, based on the previous year’s activity, and then use that flag to exclude any student who appears in both categories from the up‑front count.