Student ‘Protection Fees’ is another example of poor policy making and implementation by the federal government

(Also published on Dr. Ong’s Facebook Page)

It was announced (here and here) on December 15, 2012, that the Ministry of Higher Education (MOHE) would start charging private universities, university colleges and foreign university branch campuses RM100,000 and private colleges RM10,000 in student ‘protection fees’. These fees are to be paid once every five years as part of the process of renewing their respective operating licenses and would commence in 2013. This proposal, announced by the Minister of Higher Education, Datuk Seri Khaled Nordin, represents all that is wrong about the policy making process in the country. It uses a wrong approach to achieve a very specific policy goal, it was done without consultation with the stakeholders and, as usual, the implementation details for this proposal were left out.

The purpose of this student ‘protection fee’ is to have a fund which can be used in the event that a private institution of higher learning closes down. This fund will be used to reimburse students in the event that the institution they are attending closes down suddenly. The affected students can then use this reimbursement to enroll and pay for school fees in another institution of higher learning, if they so choose. Not only does this proposed solution fall short in helping students stuck in such predicaments, it does nothing to tackle the root of the problem – which is the issuance of operating licenses to institutions without the necessary background run institutions of higher learning.

Imagine if you are a student studying in College X. At the end of your 2nd year, the college announces that it will cease operations. Assuming that the protection fees is sufficient to reimburse this student for the fees incurred in Year 1 and 2, there is no compensation available for having to repeat Years 1 and 2 in another college / university. A much better solution, in my opinion, would be for the MOHE to ask the Malaysian Qualifications Agency (MQA) to work with the private colleges / universities to come up with a mechanism to allow students from discontinued institutions to transfer their credits to an existing college / university. This way, the students will be able to continue their education process without much disruption and hopefully, financial cost.

Also imagine if a big university or university college with, let’s say 5000 students, announces that it will cease operations. With a conservative estimate that a student would have spent an average of 2 years and RM20,000, the compensation required would come up to RM100 million. With approximately 50 university and university colleges contributing RM100,000 and another 250 or so colleges contributing another RM10,000 each, this only comes up to about RM7.5 million for every five years, which is not even sufficient to compensate 500 students, what more 5000. (A full list of private institutions of higher learning can be accessed at

Of course, the likelihood of a big private university failing is much lower than that of a small college having to close down. In fact, almost all of those students affected by this problem have been enrolled in small colleges. What this means is that this ‘protection fee’ is in fact, a subsidy from the big private universities / university colleges to provide an insurance policy for small colleges. This is not efficient nor is it fair to the larger institutions. What MOHE should instead do is to re-examine the basis on which it approves operating licenses for those organizations wanting to set up and run private higher education learning institutions. It should examine whether or not organizations which have been given these licenses actually have the experience and financial resources to run their programs and their institutions. MOHE should work with MQA, through site visits and audits, to identify those institutions which are running into financial and operational difficulties and then take the necessary actions against these institutions. Again, the focus should be on helping students in failed institutions to transition to other universities / colleges rather than to focus on reimbursement. If there are costs which need to be covered, MOHE should attempt to set up mechanisms and processes to recover these from the failed institutions in question rather than to rely on ‘protection fees’.

The response of the Malaysian Association of Private Colleges and Universities (MAPCU) Secretary General Dr Gan Eng Hong, indicates that this is a rehashed proposal that had been rejected by MAPCU in the past. What is more troubling is the fact that the MOHE failed to consult the stakeholders including the private colleges and universities as well as present and past students who are being or have been affected by this problem in order to find constructive and more effective solutions.

Finally, the fact that there are no accompanying details to this proposal shows that the MOHE has not properly thought out the implementation of this proposal. For example, who will manage this fund? Will MOHE appoint external managers or will it manage the funds itself? Does it have the capacity to manage this fund? How will this fund be replenished if they are depleted as a result of a payout? Does this mean that all students, Malaysian and foreign, will receive an explicit guarantee from MOHE that they will get back all of their academic fees in the event that their university / college closes down?

This is yet another example of poor policy and decision-making on the part of the federal government with ill-conceived policies that do not address the problems at hand and have poorly thought out implementation mechanisms. The Minister of Higher Education should immediately announce the suspension of this ‘protection fee’ in 2013. It should instead hold a dialogue with the stakeholders, especially with the private universities and colleges in order to identify more effective solutions to the problem of students being left in the lurch as a result of institutions of higher learning having to cease operations.

Dr. Ong Kian Ming
Elections Strategist, DAP

(In the interest of full disclosure, Dr. Ong is also a faculty member at UCSI University which is also a member of MAPCU)