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All higher education providers, including providers approved by the Minister to offer FEE-HELP under subdivision 16C of HESA, must be financially viable and likely to remain financially viable. To allow the department to assess ongoing financial viability, providers must submit annual financial information to the department as specified in section 19-10 of HESA, the HEP Guidelines and the Financial Viability Instructions (FVI). This information must be submitted within six months following the close of a provider’s annual financial reporting period. All financial information received by the department is treated on a commercial-in-confidence basis.
Providers must submit audited financial statements prepared in accordance with the requirements of the HEP Guidelines and FVI and completed Financial Performance information in HITS, among other requirements. Providers should note that the Minister may ask for additional information or place reporting conditions on a provider’s approval in response to emerging risks, or allow a more detailed assessment of financial viability to be undertaken.
The Minister must take into account all of the following information in determining whether a higher education provider under section 16-25 of HESA is financially viable and likely to remain so:
- ability to generate sufficient income to meet operating expenditure, debt obligations, and where applicable, to generate growth while delivering quality higher education
- maintenance of a positive net equity position, and there is no evidence to suggest this might change
- if the provider has been operating for 3 years or more – the provider has operated at a profit for at least 2 of the 3 more recent financial years
- if the provider has at least 100 enrolments in courses of study that lead to higher education awards – at least 20% of the provider’s revenue for the previous financial year came from sources other than payments that gave rise to FEE-HELP debts
- net positive cash position from operating activities
- loans, dividends or guarantees that could have a detrimental material effect on the provider’s financial position;
- the provider is not providing its asset as security other than under a commercial loan arrangement with an authorised deposit-taking institution [HEP Guidelines section 33]
The Minister may also consider:
- the impact that a provider’s broader corporate network is likely to have upon its ongoing viability
- changes in ownership or any other events that may have a bearing on Fit and Proper Person assessments
The FVI advises providers on the standard of financial information required and how financial viability is monitored.
Additionally, providers must notify the department of any event that may significantly affect their capacity to meet the quality and accountability requirements, including the financial viability requirements [HESA section 19-65]. These include things such as changes to ownership, management, or organisational structure; changes to course offerings or delivery models; large asset acquisitions and/or sales; new loan or borrowing arrangements; third-party delivery agreements; and TEQSA regulatory decisions.