Wed, Sep 16, 2009
The Straits Times
Closing loopholes in fee protection scheme

By Sandra Davie, Senior Writer

THE unfolding Brookes Business School case has again highlighted two glaring holes in the fee protection scheme that need to be plugged.

First, why are private schools not required to offer fee protection to local students? They outnumber the foreigners in many of these institutions.

Related links:
» Brookes students' fees not fully insured
» Stricter rules for private schools
» Brookes faces another lawsuit for $528,000
» School peddles fake RMIT degree

Also, despite the increasing number of rogue school operators, why is the Consumers Association of Singapore (Case) still using the 'honour system' instead of conducting checks to ensure that schools comply fully with the scheme?

The fee protection scheme was set up in 2004 after a few private schools landed in financial trouble and closed, leaving hundreds of students - mostly foreigners - without qualifications and refunds.

The school closures hit the headlines in regional newspapers and threatened to derail Singapore's then newly launched plan to become an education hub, hosting some 150,000 foreign students by 2015.

The fee scheme, put forward by the Economic Development Board, was to be administered by Case. It required schools to deposit fees collected upfront into an escrow account with a bank. The funds are then released by the bank in instalments until the students have completed their courses of study.

Alternatively, the school may buy insurance guaranteeing that students get back their fee balances if the school folds.

Charges vary according to course fees and length of coverage. But on average, a student who spends $20,000 on tuition fees for a one-year course has to pay about $300 for coverage.

Most school operators opt for the insurance scheme for two reasons. First, the money they collect in fees is not tied up in an escrow account. Also, with the insurance scheme, the cost is passed on to the student.

From the start, the fee protection scheme was compulsory for foreigners, but optional for Singaporeans. Schools enrolling foreign students were required to ensure that they applied for the fee protection scheme before the students were granted visas to live and study here.

It was never explained why the scheme was not a requirement for locals. One can only surmise that it was because the education hub idea here was targeted at foreigners, not locals.

But there is a case to be made for extending the scheme to local students in private schools. After all, they pay the same fees as their foreign counterparts.

These can add up to about $30,000 over three years for a basic degree course, and as much as $50,000 for some prestigious degree courses.

Degree-hungry Singaporeans who cannot get into local universities are also turning to the private schools in increasing numbers.

In many private schools, they outnumber foreigners, as in the case of Brookes Business School in Beach Road. The establishment was shut down in July by the authorities for peddling fake degrees from the Royal Melbourne Institute of Technology (RMIT).

The majority of the 400 students affected by the closure were locals. Most of them were working adults, and a fair number had taken bank loans to pay the $20,000 to $30,000 fees that Brookes charged. Now, they are left with no degrees, and some with no jobs. A few told The Straits Times they had to leave their jobs before their employers discovered they had bogus degrees.

They do not buy school owner Benny Yap's claim that he himself had been duped by a Vietnamese man who sold him a 'franchise' to offer RMIT degrees.

Several had banded together to file civil suits to reclaim their fees. In a case taken recently to the High Court, a group of 19 students won a judgment to claim $530,000 in fees and damages. Whether they will be able to recover the money is not known. After all, Mr Yap had said his school had no funds left.

The stranded students had to turn to the courts as the scheme to safeguard their fees had failed.

When the school was ordered to shut down, the students assumed their fees were safe. But Case told them that only $1,000 of the $20,000 to $30,000 they each paid had been insured by the school. As the scheme was based on an honour system, Case had expected the school officials to buy insurance that offered full coverage for the fees.

All Case was able to do then was file a police report and expel Brookes from the CaseTrust for Education scheme.

This is not the first time that private schools have been found to have circumvented the fee protection scheme. Earlier this year, Case revealed that it had to issue warnings to a dozen schools last year for failing to give any fee protection to students. Only after the warnings did they comply.

In explaining some of the lapses, Case said there is a time lag before it can detect a breach. It has to wait for bank or insurance company reports before it can tally up the total number of visas granted to foreign students at a school against the total number with fee protection.

Even then, Case does not check whether schools have insured the students' fees fully. It works on the assumption that school operators will comply with the rules of the scheme.

If this is allowed to go on, we can expect more scandals to be uncovered in the private education industry. This will affect Singapore's objective of becoming a first-rate education hub.

The Government is in the process of putting the finishing touches on a draft law to reinforce operating rules for private schools.

One suggestion that should be looked into is to take away the option of the insurance scheme. All schools should be required to put their fees in an escrow account, to be released progressively till students have completed their courses of study.

Earlier this year, despite the economic downturn, the private education industry was cheered by news that the number of foreign students here was nearing the 100,000 mark.

The authorities working on the new Bill must ensure all the loopholes in the fee protection scheme are closed.

If not, Singapore will have difficulty realising its ambitions of becoming a major study destination.

This article was first published in The Straits Times.

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Closing loopholes in fee protection scheme
Stricter rules for private schools
Brookes faces another lawsuit for $528,000
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