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Market intelligence for international student recruitment from ICEF
20th May 2020

FELCA continues to advocate for voucher system as an alternative to refunds

Short on time? Here are the highlights:
  • An industry proposal advances a model whereby schools would issue vouchers rather than refunds for students whose study plans have been disrupted this year
  • The idea has received a positive response in principle, but its implementation has been hindered by consumer protection laws, standing refund policies, and the normal disbursement of student fees among agents, accommodation providers, airlines, and schools

The Federation of Education and Language Consultant Associations (FELCA) is continuing to advance a proposal this month for widespread use of vouchers between language schools and agents.

The idea was first raised in discussions between FELCA and GAELA (Global Alliance of Education and Language Associations) in April. While it received some support from national school associations at the time, the implementation to date has been mixed and has been limited by some important practical considerations. A quick survey of national ELT associations this month indicates that none have yet formally endorsed the voucher model, nor has it been widely adopted among member schools.

Even so, FELCA President Paolo Barilari sees an important role for vouchers in helping the industry cope with high volumes of refund requests this year. In a recent message to stakeholders, he explains, “Our sector is like a big table that stands on three solid legs: the students, the schools and the agents, all necessary to keep the sector going. Students are vital, of course. They go to the schools to improve their skills necessary to succeed in a competitive world. Agents are the reliable guides who help students to make the right choice.”

“This whole system runs the risk to collapse because of the pandemic, the impossibility to travel, the lack of confidence in meeting new people that will be difficult to overcome in the next months. In the meantime, partnership between schools and agent might be broken by the lack of liquidity and the request for refunds and reimbursements.”

The voucher model, FELCA argues, is a way to ease that strain for schools and agents alike. “It is a way to keep the value [of booked study programmes] inside the industry,” says Mr Barilari, who is also the president of Italian agency Lingue nel Mondo. “And to the students we say, ‘We know you can’t do it right now but don’t worry your money is not lost and you can do it later.’”

The FELCA proposal sets out in detail how a voucher system might work for students who have already booked – and paid for courses, accommodation, and travel – and those who will be encouraged to book in the coming months.

Under this model, and as an alternative to providing refunds to students who are unable to follow through on study plans this year, schools would issue a voucher for the value of the student’s programme, valid for 12 months from date of issue or through December 2021. Both the student and the agent would be associated with the voucher, which provides some mechanism for assessing commissions when the voucher is satisfied but also provides the student with further protection should the agency cease trading before the student is able to undertake his/her programme.

In the event that a voucher-issuing school should close in the interim, the FELCA proposal anticipates that the voucher might be honoured by other member schools within the same national association under existing student protection schemes.

To this point, schools are opting in, or not, on an individual basis, explains Mr Barilari. Those that haven’t embraced the voucher idea as yet are relying on their standing terms and conditions in adjudicating refund requests. “Terms and conditions and cancellations fees are totally applicable in normal times but these are special conditions,” he adds. “Everything is stopped; everything is blocked. The scale is what makes this situation exceptional. This is a different level.”

The idea of retaining value within the industry is a compelling one, but the wider adoption of vouchers will be challenged by some practical considerations.

First, consumer protection legislation in some jurisdictions, notably within the European Union, requires that refunds be issued to customers. This requirement has been debated between the EU and some member-states recently but to this point Brussels is still insisting that refunds are required.

Second, the normal disbursement of funds between agencies and schools may frustrate the possibility of a school issuing a voucher for the full value of a student’s programme. Perhaps the agency has retained commissions, for example, or some portion of the student fees has been paid to an airline or for accommodation which may or may not be fully recoverable.

Finally, some schools will have more limited discretion over how their terms and conditions are applied, such as language centres that are part of universities or colleges and where refund policy may be dictated by the parent-institution. Regardless of any such institutional affiliation, schools may also be unable to entertain the idea of having to honour a voucher – and the financial obligation that goes with it – a year or more into the future.

“It would be burdensome to be teaching out courses that students had paid for almost two years previously,” explained one peak body executive. “Notwithstanding these obstacles, [some] schools still favour the voucher scheme. It is in the mix with online delivery and course deferral until classes resume.”

For additional background, please see:

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