Tuition fee refunds: students, contracts and consumer rights in a time of Covid

Kris Robbetts, partner at law firm VWV, explains the challenges universities face next year as students return to campus

Back in March, a petition was created calling for tuition fees refunds for all students in higher education whose studies were disrupted first by strike action and then by the pandemic. 

Despite gaining more than 345,000 signatures (245,000 more than is required for parliament to consider the issue for debate), the government has indicated that an automatic tuition fee refund should not be expected.

At first glance, this position appears to vindicate the enormous efforts made by many universities in a very short space of time to maintain educational continuity remotely.

In truth, however, it takes no view on whether or not refunds might be justified.

Instead it confirms only that, if they are, the money will not come from government but from providers and must be pursued by affected students themselves. In legal and regulatory terms, the default position is reaffirmed. 

A dispute between student and provider about the standard of educational services reverts to internal procedures, regulators, sector bodies and, if necessary, the courts. This is not welcome news for a sector already facing a substantial deficit but it is the situation in which providers must – for now at least – plan for the future and manage risk.

Consumer protection law and the Competition and Markets Authority

Higher education is delivered to students via a contract underpinned by consumer law protection and public law principles. This means that while a binding contract for educational services will be in place, it will only be enforceable against students by their higher education provider to the extent that the terms are reasonable and brought to their attention in advance.  

Recognition of the imbalance of bargaining power between students acting as individuals and HE providers acting as ‘traders’ is reflected in a range of consumer protection measures. 

Students unhappy with the services delivered to them under a contract who complain unsuccessfully have the option of pursuing common law remedies (e.g. damages, specific performance) via a legal claim for breach of contract or statutory remedies, notably a price reduction or repeat performance under the Consumer Rights Act 2015.

Given the difficulties of repeating a year or even a term, it is likely that student complaints and/or claims with the objective of securing at least a partial refund represent the greater risk to providers.

Only a court can decide whether a particular contractual term or practice infringes the law. But  there are also a number of general public enforcers empowered to monitor compliance and provide direct help to consumers, the most prominent being the Competition and Markets Authority (CMA). Alongside its ability to impose enforcement orders and seek undertakings from HE providers, the CMA is the source of authoritative sector-specific consumer law protection guidance and is responsible for setting minimum standards for fairness, the provision of information and the handling of complaints.

This places the CMA at the heart of the consumer law regime.

Promotional information on the website or in materials such as brochures and handbooks may form part of a binding contract if relied upon by students when accepting a place. It follows that the same significance may be attached to any representations providers make now about what students can expect in September

Sector regulation

Calls for a standard student contact in higher education have gained little traction but initial and ongoing registration with the OfS requires providers in England to have discrete student terms and conditions, a ‘student protection plan’ and a policy for fee refunds and compensation which reflect consumer law obligations.

Compliance with the so called ‘C conditions’ of registration also require implementation of policies and procedures with due regard to relevant consumer protection law guidance (C1), co-operation with the complaints scheme run by the Office of the Independent Adjudicator (OIA) (C2) and a notification to the OfS if there are events which require implementation of student protection measures (C3).

Unsurprisingly, the extreme level of disruption caused by the pandemic has led to the OfS adjusting its approach to regulation. Until next June, the OfS will not take regulatory action against a provider unless it becomes aware of practices that appear to constitute a significant disregard for CMA guidance and a significant breach of consumer protection law or reasonable efforts have not been made to protect student interests. The meaning of ‘significant’ here is not specified.

Only current students have the option of complaining to the OIA but both prospective and current students are encouraged to notify the OfS if they have concerns about the clarity or timeliness of information their provider has given them. As before, the number and nature of complaints that reach the OIA will be treated by the OfS as a means to identify where regulatory intervention against a provider may be justified.

What higher education institutions promise their students is subject to the requirements of consumer law. Promotional information on the website or in materials such as brochures and handbooks may form part of a binding contract if relied upon by students when accepting a place. It follows that the same significance may be attached to any representations providers make now about what students can expect in September.  

Discover Uni, the website that replaced Unistats back in September 2019, identifies the sort of high level information that must be made available to students before places are confirmed and clearing gets underway:

  • how much of a course is proposed to be delivered online or face-to-face, or a mix of both, if the balance between, lectures, seminars and self-learning has changed or if placements are affected.
  • what support there will be in place for students to access any online learning
  • any changes that may occur due public health guidance, such as changes to social distancing, and implications for provision, such as being unable to attend lectures at certain times or having to change living arrangements in student accommodation
  • the terms and conditions for your course which should be clear
  • how to access a clear and fair complaints process for the university or college cost of the course, including making clear if any discounts have been offered for the year in which adjustments will be made, and if the cost will increase to a ‘normal’ level thereafter

Despite Discover Uni being partly owned by the OfS, the latter’s approach to ensuring that students can make informed choices has focused on what should not be promised. In May, OfS chief executive Nicola Dandridge told the education select committee: “What we don’t want to see are promises that it’s all going to be going back to usual – an on-campus experience – when it turns out that’s not the case.” 

The outcome of a student challenge to the adequacy of the educational services they receive next year will likely depend heavily on exactly what they were told to expect. Unhelpfully for students, being too specific and/or too optimistic is risky for providers.

Some universities were quick to declare that they would not be offering face-to-face lectures next year, instead moving to a combination of online lectures and small group teaching to the extent that social distancing allows. Others took longer to publish their plans but most, if not all, have settled on a flexible blended approach that will enable them to respond to changes in government guidance.

The minister’s view

Announcements from the Department for Education (DfE) and minister for higher education Michele Donelan also take a pragmatic line. The government is clear that it will work with providers to ensure they are able to make all reasonable efforts for students to continue and complete their studies.

No single approach is recommended because universities are each unique, independent and, unlike schools, they are ultimately responsible for the decisions they take in response to the pandemic.

Nevertheless, there is an expectation that all providers will identify what they have done to ensure that students and staff can return for the new academic year confident that steps have been taken to reduce the risks to their university experience. The measures deployed and the difference this is likely to make should be clear.

On the issue of a tuition fee refund, the minister, both in media releases and in evidence given to the House of Commons Petitions Committee, argued it would be inappropriate for the government to intervene on behalf of students.

Notwithstanding that this step could take significant financial pressure away from providers, one of the reasons given is that universities are responsible for the setting of fees (subject to a government cap) and whether or not a student is entitled to a refund depends on their “individual contractual relationship and what they have signed up to do.

It is also unclear how many students will come forward or how many of those have a genuine case. Students are therefore advised to make a formal complaint before going to the OIA if necessary.  

It should be noted that the Petitions Committee’s key findings and recommendations do not support a universal refund or reimbursement of tuition fees for all students. They do, however, seek greater clarity and certainty for students and have called on the government to update its response to the fee refund issue so that it addresses the issues raised more directly.

What of the OIA?

All of which suggests that an increase in complaints and referrals to the OIA should be expected in the next few months. Perhaps with that in mind, the OIA has published two briefing notes for students since March, the latest one recognising that what might have been considered reasonable service delivery during the early stages of lockdown is unlikely to be so now that the initial crisis period has passed and providers have had time to regroup.

While it is acknowledged that not all students will be consumers entitled to the associated legal protections, it is the view of the OIA that something unlawful is unlikely to be reasonable irrespective of a student’s status. It follows that any blanket refusal by a provider to consider a tuition fee refund in any circumstances will likely not be reasonable either.  

Fundamentally, the OIA will look at what a provider promised and what was actually delivered, as well as whether or not what the provider did to address the situation was reasonable at the time. It is not within the OIA’s remit to take a view on academic quality but guidance from Professional Statutory and Regulatory Bodies together with the QAA and OfS and good practice in other comparable providers will be considered.

The OIA can – and has – recommended fee refunds in the past but equally may make no recommendations even in response to a complaint found to be justified if there is deemed to be no practical way to put the situation right.  

What does this mean for the new academic year?

The government is yet to provide its updated response to the Petitions Committee regarding a tuition fee refund but, given the circumstances, seems unlikely to step in with public funding. On the assumption that there will not be a government-backed refund scheme any time soon, higher education providers must remain vigilant and ready for an increase in student service quality related complaints and contemplated claims during 2020/21.  

Both the OfS and OIA advocate a sensible approach to the challenges being faced. Being clear about what students should expect next year is a vital aspect of risk management for providers. Equally, students need to be realistic and reasonable about variations in provision caused by pandemic related reasons beyond providers’ control.

Regulatory action is unlikely where due regard to student interests is in evidence. Even so, the principles of consumer protection law continue to apply and providers will be expected to do more now that the initial phase of the pandemic is over if they are to avoid potentially expensive and time consuming litigation.

Kris Robbetts is a partner at VWV

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