Educational Institutes Charging Hefty Fees: The Unending Saga

By Romit Bhattacharjee and Ritwik Tyagi

Introduction

Education is probably the most sought-after commodity in this country. Predominantly populated by middle-class to poor families, education appeals as the key to a better life and unfulfilled dreams for children hailing from such families. Hence this sector has turned into a lucrative business in the last few decades. But the coronavirus pandemic has brought a paradigm shift in the way educational institutes in this country have been functioning. Institutes have shifted from the brick and mortar concept to online mode of education, which now is proving to be cost-effective and a rather effortless mode of imparting education. But amidst the crashing economy, massive job losses and surging coronavirus infections count, parents have an added burden to address: exorbitant fees charged by the educational institutions! While a PIL filed before the Apex Court for waiver of school/college/university fees awaits hearing, here is our take on the issue.

Are Educational Institutes Justified in Charging Hefty Fees?

In the landmark case of TMA Pai Foundation v. State of Karnataka, the Supreme Court had emphasized that education being a charitable occupation, the government should draw up regulations for ensuring excellence in education and also for restricting institutions from profiteering. The Court noted that, “since the object of setting up an educational institution is by definition ‘charitable’, it is clear that an educational institution cannot charge such a fee as is not required for the purpose of fulfilling that object. To put it differently, in the establishment of an educational institution, the object should not be to make a profit.”

In another case, Islamic Academy v. State of Karnataka, one of the issues before the Court was that it had become a sort of trend for educational institutes to collect fees of the entire course in advance from the students. The justification preferred by these institutes was that they couldn’t be sure as to the fact whether the student would complete the course or leave in between. Thus, if the student left mid-way, then his/her seat would lie vacant for the rest of the course and that would cause financial losses to the institute. However, the Court opined that an educational institution can be permitted to charge the fees only for one semester or year. With respect to students leaving mid-way, it was the Court’s view that the institution could direct the student furnish a bank guarantee that the balance fees would be remitted to the institute.

In these testing times too, the role of the judiciary has come to the forefront. The Delhi High Court, on April 17, 2020, in the case of Rajat Vats v. Government of NCT Delhi, upheld the directions issued by the Directorate of Education stating that schools are not empowered to charge any fee except the tuition fee till further orders; tuition fee can be collected only on monthly basis; fees for the academic session 2020–21 cannot be increased and online classes are to be provided to the students irrespective of the inability of the student/ parent to make the payment of the fees.

Similarly, the Madras High Court, in Federation of Association of Private Schools in Tamil Nadu v. Government Office of Revenue and Disaster Management, directed schools to formulate a scheme to allow the payment of school fees in instalments for a while, with a view to balance the interests of educational institutions and parents. In recent order in the same set of petitions, the Madras High Court has allowed private unaided institutions to collect only 40% ‘advance fees’ pending resumption of the physical classes as the Court was of the view that the immediate requirement for the present is that the institutions must “kick start” their functioning which requires some flow of funds.

In Independent School’s Association Chandigarh (Regd.) v. State of Punjab, the Punjab and Haryana High Court held that “the school management of each school shall work out their actual expenditure incurred under the annual charges for the period the school remained closed and recover only such genuine expenditure incurred by them but shall not recover any charge for this period for any facility towards which no expenditure was incurred.” Further, in the case of Japinder Singh v. Union of India, the Uttarakhand High Court directed[1] that a private school could not be allowed to charge tuition fees if its students were not able to access online classes.

Institutes v. Guardians: The Dichotomy

The crunch faced by the economy has affected the educational institutions as well. News reports demonstrate just how hard the lockdown has been on private educational institutions, especially the coaching centers[2] which had mushroomed up across the country in the previous decade. Unaided private schools[3] are facing severe financial constraints and are having to consider winding up their operations. Although a return to physical teaching remains out of the picture for now, the institutes are having to maintain their infrastructure and pay up on loans taken for expansion projects. Around half of India’s school-going population[4] studies in private schools, therefore, if these institutes shut down due to a lack of funds, it would be a massive struggle to ensure that each child gets access to education.

Faculty at private educational institutes across the nation have been staring at pay cuts and job losses because of the inability of parents to pay the fees. Institutes have failed to pay salaries[5] to their faculty from as long back as March and April of this year, when the lockdown was enforced. In fact, even government college faculty are facing brunt of the economic slowdown. Professors of a government college in Delhi recently filed a plea[6] before the Delhi High Court seeking a direction to the state government to pay their salaries and other emoluments, which have not been paid since May, 2020. The Delhi government has also backed away[7] from paying the CBSE board exam fees for its students this year because of lack of resources.

Therein lies the dichotomy of the situation. On one hand we have the guardians who want to ensure the best education for their wards but are facing an unprecedented humanitarian crisis that has pinched their pockets; and on the other side we have the institutes who are falling behind on salary payments to their faculty. The laying-off of teachers affects not just the teacher individually, but it also has a bearing on all the students who will be devoid of learning during this time.

Keeping this dichotomy in mind, in Ashish Kumar Garg v. State of Haryana the P&H HC recently took the middle path and ordered[8] that annual charges to the extent of 50% could be charged by the institutes for maintenance of school infrastructure. Moreover, the court provided relief to parents by restricting institutes from charging any transport fee for the time being as students were not physically coming to school.

Conclusion

The issue of charging of exorbitant fees has also been dealt with by the Union Government in its recently released[9] New Education Policy, 2020, wherein it has been stressed that all institutes of higher education would have to be transparent about their fee structures and they would be subject to the same standard of audit and disclose as any not-for-profit entity. Moreover, no arbitrary increases in the fee amount can be made by the institutes during the course of a student’s enrollment. The fee determining mechanism is proposed to be one which ensures that not only is the cost incurred by the institute recovered, but also that their social obligation is discharged.

Footnotes

[1] Japinder Singh v. Union of India, Writ Petition (PIL) №59 of 2020 (Uttarakhand H.C.) (Pending).

[2] Ritika Chopra, Indian Express, Coaching industry tries to reinvent itself in Covid times, June 8, 2020 available at https://indianexpress.com/article/india/a-long-recess-6446348/ (Last visited on October 25, 2020).

[3] Shyna Kalra, Indian Express, Covid-19 impact: Unaided private schools fear closure as fees slashed, students switching to govt schools, August 8, 2020 available at https://indianexpress.com/article/education/thousands-of-private-schools-fear-closure-amid-pandemic-seek-support-from-government-6536169/ (Last visited on October 25, 2020).

[4] CENTRAL SQUARE FOUNDATION, State of the Sector Report on Private Schools, (2020), available at https://centralsquarefoundation.org/State-of-the-Sector-Report-on-Private-Schools-in-India.pdf (Last visited on October 25, 2020).

[5] Prashant K. Nanda, Live Mint, Faculty at private schools, colleges stare at salary cut, late payment, April 13, 2020 available at https://www.livemint.com/education/news/faculty-at-private-schools-colleges-stare-at-salary-cut-late-payment-11586719545399.html (Last visited on October 25, 2020).

[6] Live Law News Network, Professors Of A Delhi College Move Delhi HC Seeking A Direction To Delhi Govt To Pay Salaries, September 18, 2020 available at https://www.livelaw.in/news-updates/professors-of-a-delhi-college-move-delhi-hc-seeking-a-direction-to-delhi-govt-to-pay-salaries-163128 (Last visited on October 25, 2020).

[7] Sukrita Baruah, Indian Express, Fund crunch, Delhi govt can’t pay CBSE board exam fees, September 19, 2020 available at https://indianexpress.com/article/education/fund-crunch-delhi-govt-cant-pay-board-exam-fee-this-year-6602067/ (Last visited on October 25, 2020).

[8] Live Law News Network, Punjab & Haryana HC Restrains Schools From Levying Transport Charges During Online Classes; Building Maintenance Fee Capped To 50%, September 29, 2020 available at https://www.livelaw.in/news-updates/punjab-haryana-hc-restrains-schools-from-levying-transport-charges-during-online-classes-building-maintenance-fee-capped-to-50-read-order-163677 (Last visited on October 25, 2020).

[9] Amandeep Shukla, Hindustan Times, New Education Policy 2020: NEP stresses on transparency in charging of fees, July 29, 2020 available at https://www.hindustantimes.com/education/new-education-policy-2020-nep-stresses-on-transparency-in-charging-of-fees/story-1JTP69qVgaJITRZPdUQDHJ.html (Last visited on October 25, 2020).

[October, 2020]