What is the TPS Levy?
The Tuition Protection Service (TPS) Levy is an annual fee paid by CRICOS-registered providers that enrol international students or CRICOS providers. It funds a national protection scheme designed to support students if their education provider is unable to deliver the course they have paid for. How does it work? In simple terms, the TPS Levy acts as a safety net. Providers contribute to a pooled fund each year. If a provider closes or fails to deliver a course, this fund is used to either place affected students into an alternative course or arrange refunds for the unused portion of their tuition fees. Think of it as an insurance system, where all providers contribute so that students are protected if something goes wrong.
Why was it introduced?
The TPS Levy was established by the Australian Government in response to past instances where education providers abruptly closed, leaving international students without qualifications or financial recourse. In response to this, they used a risk-management framework to ensure the integrity of the multimillion–dollar education industry and reputation of education in Australia. The levy is structured around a Risk-Rated Premium Component, which is informed by several key actuarial observations:
- Enrolment Volatility as an Instability Metric: Actuarial data demonstrates a direct correlation between extreme fluctuations in student enrolment and provider default. Rapid, unsustainable growth or a sudden, sharp decline in student numbers is treated as a primary “red flag” for internal instability or a failing business model.
- Market Concentration Risk: Providers that rely heavily on a single source country for their student population are mathematically riskier. These providers are highly vulnerable to external shocks, such as geopolitical tensions, changes in bilateral visa policies, or economic downturns in that specific region. Market diversity is therefore incentivized through lower risk ratings.
- Compliance and Governance History: Historical data shows that providers with a track record of non-compliance (e.g., sanctions under Section 83 of the ESOS Act) or those requiring frequent regulatory intervention have a higher statistical probability of defaulting. The levy model ensures these providers pay a higher premium to reflect the potential cost of a future “bailout.”
- Actuarial Solvency and the “Worst-Case Scenario”: The TPS Director, guided by actuarial modeling, determines the Targeted Solvency Level of the Overseas Students Tuition Fund (OSTF). The fund is sized to ensure that even the collapse of a Tier 1 (large-scale) provider would not exhaust the reserve, ensuring student placement or refunds are guaranteed without government intervention.
Using the findings above such as the enrolment trends, financial viability, and market diversity, the Australian Government created how to compute the premium.
What are the Levy principles?
The TPS Advisory board agreed to the following principles when providing advice to the TPS Director regarding the levy settings:
- Advice should take into account the broader risk environment and aim to ensure that revenue levels are sufficient to sustain the relevant fund, while remaining viable and manageable for the industry.
This principle aims to ensure that the fund is sufficient to meet potential liabilities, including those associated with providers with large student cohorts, while remaining proportionate and financially sustainable for smaller providers. It emphasises the need to achieve an appropriate balance between maintaining adequate funding levels and avoiding undue financial burden on training providers.
- The model for each levy should reflect gradual change and assist the industry with business planning by providing a stable regulatory environment.
This principle supports the industry and CRICOS-registered providers by promoting a gradual approach to any changes in fees, particularly where levy increases are required. Implementing adjustments over an extended period allows providers to plan and manage their budgets and tuition fees more effectively, reducing the risk of sudden financial strain and supporting overall sustainability.
- The model should be as simple and transparent as possible, preferably based on a small number of risk factors.
This principle emphasises that the method for calculating the levy should be transparent and clearly communicated, without unnecessary complexity. It also highlights that the calculation should, where possible, be based on a limited number of key factors relevant to a provider, such as risk profile and length of operation, to ensure the approach remains straightforward, fair, and easy to understand.
- Risk premiums imposed should provide incentives for providers to adopt positive behaviours.
This principle ensures that premiums act as an incentive for CRICOS-registered providers to strengthen management practices and maintain compliance with standards. As providers demonstrate effective governance and ongoing compliance, they are more likely to achieve greater financial stability, which may be reflected in lower premium levels.
- Additional imposts on industry, such as data collection, should be minimised where possible, consistent with the ability to set sound risk-based levies.
Finally, this principle recognises that CRICOS-registered providers are already subject to extensive compliance requirements. As such, any additional data collection should be minimised where possible. It is intended that the Board and Director rely primarily on existing data sources, such as information already reported through PRISMS, to reduce administrative burden. This approach supports providers in focusing their resources on maintaining quality systems and delivering effective training, rather than responding to additional reporting obligations and further administrative burdens.
What is the International TPS Levy comprised of?
The levy has four components namely the administrative fee, the base fee, the risk rated premium, and the special tuition protection component.
1. The administrative fee component
The fund gathered from this fee helps fund the daily operations such as managing defaults, coordinating student placements, and maintaining the PRISMS-linked monitoring systems.
2. The base fee component
The base fee covers the majority of the core cost of maintaining a sustainable OSTF (Overseas Students Tuition Fund) safety net regardless of a providers specific risks.
3. The risk-rated premium
The risk-rated premium comprise of several risk factors which were determined by the TPS Director with the help from the advisory Board and AGA (Australian Government Actuary). The risk factors calculates the risk of provider closure according to the factors listed below:
a. Base Risk Factor
The proposed base risk factor value of 1.0 applies to all non-exempt providers for the 2026 year and serves as a common starting point. It ensures that each provider contributes a baseline amount to the risk pool, irrespective of individual performance, management practices, or operational status.
b. Length of Operation
The length of operation is informed by historical data, with higher risk values generally assigned to newly or recently established providers. As providers demonstrate stability and continuity over time, their associated risk scores typically decrease.
c. Volatility in Enrolments
Significant increases or decreases in international student enrolments may indicate volatility and are assessed by comparing enrolment data over the previous two years. A greater variation between enrolment figures corresponds to a higher risk factor. This measure is applied only to providers that have been operating for at least two years, to avoid duplicating risk impacts. In effect, providers are assessed either on their length of operation or on enrolment volatility, but not both concurrently.
d. Source Country Concentration
Providers that rely heavily on recruiting students from a single country may attract a higher risk factor under this criterion, as this concentration can increase exposure to external risks such as political, geopolitical, or economic changes in that source country. This approach is intended to encourage providers to diversify their student markets and reduce reliance on a limited number of regions, thereby supporting greater stability and resilience.
e. Non-Compliance and Registration Renewal
Finally, the last factor encourages providers to implement systems and policies that support compliant behaviour. This criterion considers indicators such as late payment of the levy over the previous three years, instances of non-compliance with the ESOS Act 2000 in prior years, and whether ASQA or TEQSA granted a short-term renewal instead of the maximum allowable registration period in the preceding year.
4. Special Tuition Protection component
This specific fee is only charged when the balance of the OSTF is below the target size and is calculated by multiplying the specified percentage for the year and the provider’s overseas student tuition fees for the previous year. The advisory Board maintained that the specified percentage for 2026 is 0%.
What are the Pros and Cons of the TPS Levy relevant to the Stakeholder?
The Tuition Protection Service (TPS) Levy plays a significant role in safeguarding Australia’s international education sector, but its impact is experienced differently depending on the stakeholder. Understanding these perspectives provides a more balanced view of how the system functions in practice.
For Students
From a student’s perspective, the TPS Levy offers an important layer of financial security and reassurance. One of its key advantages is the protection it provides if a provider is unable to deliver a course. In similar cases, students are either assisted in finding an alternative course or supported in receiving a refund for the unused portion of their tuition fees. Rather than being left stranded due to unexpected provider closures, students can be transferred to another approved provider when possible, allowing them to continue progressing toward their qualification. This contributes to a more stable and supportive learning experience. However, one concern is that the cost of the levy may be indirectly passed on to students through increased tuition fees, even though it is formally paid by providers.
For the Government
From a government perspective, the TPS Levy supports the credibility and integrity of Australia’s international education system. The system also helps reduce reputational risk at a national level. Without such protections, provider failures could damage confidence in Australian education and discourage future enrolments. The TPS therefore acts as a safeguard not only for individual students but also for the country’s broader education brand. However, one possible downside is that the TPS requires ongoing administration, monitoring, and coordination, which adds to regulatory workload and resource demands. Additionally, there is also potential for criticism if the system is perceived as slow or inefficient in responding to provider closures or student placements, particularly during high-pressure situations.
For the Providers
For CRICOS-registered providers, the TPS Levy contributes to a more stable and trusted education environment by participating in a shared protection system. The shared-risk model is another advantage, as it distributes the burden of provider failure across the sector rather than placing responsibility solely on individual organisations. However, there are also notable challenges for providers. The most immediate is the additional financial cost, as the levy represents an ongoing expense that must be factored into operational budgets. For smaller providers, this can feel particularly burdensome. Some providers strongly believe that current policies and systems that are already in place is more than sufficient enough to protect their own students. Particularly for those providers with strong compliance records and consistent delivery outcomes, they would most likely feel that they are contributing to a system designed to cover risks that they believe they are unlikely to generate themselves, which can raise concerns about fairness in contribution structures.
If you are a student or work within an CRICOS-registered providers, how do you view the TPS Levy in practice? Does it feel like a necessary safeguard, or more like an added cost to the system?
Now that you understand how it works and why it exists, has your perspective changed at all?
Share your thoughts, experiences, or even challenges you’ve observed in the comments below. Real-world perspectives help build a more informed and balanced discussion about the role the TPS Levy plays in protecting students and shaping the sector.
Sources
Australian Government Department of Education (n.d.) International education and the Tuition Protection Service (TPS). Available at: https://www.education.gov.au
Australian Government Department of Education (n.d.) Tuition Protection Service (TPS). Available at: https://tps.gov.au
Australian Government (2012) Education Services for Overseas Students (TPS Levies) Act 2012. Available at: https://www.legislation.gov.au/Series/C2012A00016
Australian Government (2012) Education Services for Overseas Students (TPS Levies) (Collection) Act 2012. Available at: https://www.legislation.gov.au/Series/C2012A00017
Australian Government (2000) Education Services for Overseas Students Act 2000. Available at: https://www.legislation.gov.au/Series/C2004A00757
Australian Skills Quality Authority (n.d.) Home page. Available at: https://www.asqa.gov.au
Australian Trade and Investment Commission (Austrade) (n.d.) International education sector. Available at: https://www.austrade.gov.au/international/invest/education
Commonwealth of Australia (n.d.) CRICOS register of education providers. Available at: https://cricos.education.gov.au
Draft Settings of the 2026 International TPS Levy. https://www.education.gov.au/download/19510/draft-settings-2026-international-tps-levy-fact-sheet/41989/document/pdf