TAFE eyes new debt collector to drive out students

TAFE SA is looking for a new debt collection agency to collect over $200,000 a month in unpaid fees by tracking down students, going to their homes, and making “telephone inquiries” to pay.

TAFE SA has launched a call for expressions of interest for the provision of “debt collection services” by a “third party debt collection agency”.

The RFP states that the successful contractor is expected to manage approximately 320 TAFE SA debtors per month, representing an “average monthly debt value” of $220,000.

“TAFE SA requires both domestic and international debt collection services for the collection of unpaid tuition fees and corporate accounts,” the tender states.

“TAFE SA’s main debt profiles include domestic students, public/non-public listed companies, organizations, individual traders, small partnerships and the main objective of the tender is the recovery of these debts .

“It may happen that TAFE SA needs assistance with the collection activity of the debt portfolio of international students.”

The professional training provider, which says the tender has been issued to replace its existing debt collection agent appointed in 2018, describes in the procurement document its intention that the new debt collection service be “neutral to TAFE SA” and based on an “incentive service-based service model”.

“It is intended that the services will be funded by fees, collected by the service provider, directly from the student who is the target of debt collection,” the tender states.

Incidents likely to result in adverse public criticism should be avoided at all times

“It is important to note that there is no guarantee of the volume or amounts of debts to be returned over the term of the contract.”

TAFE SA said it may appoint one or more debt collection agencies to collect unpaid fees, including the state government’s Fine Enforcement and Collection Unit. The successful contractor is expected to begin work in July.

Another procurement document from TAFE SA states that the named debt collector “shall not take any legal action against the debtors” but is required to take “pre-judicial action to recover the debts”.

These actions include “telephone enquiries, emails, text messages, field calls [and] jumping tracks”.

Skip tracing is a common method used by debt collectors and private investigators to locate a hard-to-find person. Field calls are a personal visit to someone’s address.

A well-funded TAFE would not require such a heavy-handed approach.

TAFE SA then requests that all field calls be “conducted with the utmost professionalism” and that the contractor provide a draft version of all debt collection letters and texts.

“Incidents likely to result in negative public reviews should be avoided at all times,” the tender states.

Another part of the tender asks the contractor to “approach debt collection with sensitivity and understanding when dealing with low-income students, taking into account their ability to pay.”

However, the successful debt collector is also required to recommend legal action to TAFE SA “whenever necessary to collect high value debts”.

TAFE SA CEO David Coltman said having a contracted debt collection provider is “standard business practice among higher education providers in Australia”.

“With many of the organizations and students we work with each year, there are circumstances where recovery of unpaid fees and/or services is necessary,” he said in a statement.

TAFE SA did not respond to questions about the amount of uncollected debt it has on its books. He also did not give details of the debt collection company she currently has under contract and how much unpaid fees that agency has collected.

Coltman said TAFE SA suspended collection of foreign debt “at the height of the pandemic”.

“During the COVID pandemic, TAFE SA has increased its support for our students. This included students who were struggling financially,” he said.

“At the height of the pandemic, we suspended external debt collection activities and provided greater flexibility through a variety of initiatives for students with their fee payments.”

InDaily previously reported TAFE students who were hit with unexpected fees of up to $10,000 after the state government cut a grant for their course.

Australian Education Union SA branch president Andrew Gohl said TAFE’s search for a debt collector was part of a “bigger issue that needs to be addressed”.

“A well-funded TAFE would not require such a heavy-handed approach,” he said.

“Vocational education and training should be recognized not only for [the] role it plays in teaching essential skills for a range of industries, but also for the benefits that this public educational institution and its work have the [for] the economy at large.

When asked if he would ask the state government to drop its search for a debt collector, Gohl said, “More and more urging state and federal governments to reinvest in TAFE for the common good.”

InDaily contacted Education Minister Blair Boyer’s office for comment, but did not receive a response by the deadline.

TAFE SA’s offer requires that debt collection be performed “in accordance with TAFE SA’s current policies and submitted and conducted in accordance with all applicable federal, state and local laws.”

InDaily asked TAFE SA how it planned to ensure the compliance of the new contractor. Coltman said it would “work with the supplier to ensure consistency with TAFE SA policy and procedure.”

“At TAFE SA, we prioritize supporting all students who are experiencing financial difficulties,” he said.

“This includes working with them in individual and personal circumstances, offering installment fees (payment plans), providing support and advice for any well-being issues and, in some cases, helping our students to access emergency financial aid.

“The successful debt collection provider will be used as one of many options available to support TAFE SA’s debt collection processes.”

TAFE SA defines unpaid debts as invoices that remain unpaid after going through the training provider’s “debt collection cycle” and that are still unpaid two weeks after the issuance of a seven-day demand letter.

Potential contractors were asked to specify a performance indicator indicating the percentage of TAFE SA’s debt that they believe they can recover.

TAFE SA also indicates that it can recall a debt within two working days “without penalty or cost or applied”.

Submissions for the tender close June 2.

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Tana T. Thorsen