TAFE SA has released a tender calling for expressions of interest for the provision of “Debt Recovery Services” from an “external third-party debt collection agency”.
The tender outlines that the winning contractor would be expected to handle roughly 320 TAFE SA debtors a month, accounting for an “average monthly debt value” of $220,000.
“TAFE SA has a need for debt recovery services both domestic and international for the recovery of unpaid student fees and corporate accounts,” the tender states.
“TAFE SA main debt profiles include domestic students, public/non-public listed companies, organisations, sole traders, small partnerships and the primary purpose of the tender is the collection of these debts.
“There may be the need on occasions that TAFE SA may require assistance with the collection activity of the international student debt portfolio.”
The vocational training provider, which says the tender has been released to replace its existing debt collector appointed in 2018, outlines in the procurement document its intention for the new debt collection service to be “cost neutral to TAFE SA” and based on an “incentive-based service model”.
“It is anticipated that the services will be resourced by a charge, levied by the service provider, direct to the student that is the target of debt recovery,” the tender states.
Incidences that may give cause to adverse public criticism must be avoided at all times
“It is important to note that there is no guarantee of the volume or amounts of the debts to be referred over the term of the contract.”
TAFE SA said it may appoint one or more debt collection agencies to recover unpaid fees, including the State Government’s Fines Enforcement and Recovery Unit. The successful contractor is expected to begin work in July.
Another procurement document from TAFE SA states that the appointed debt collector “must not instigate any legal action against debtors” but is required to initiate “pre-legal action to recover debts”.
These actions include “phone demands, emails, texts, field calls [and] skip traces”.
Skip tracing is a common method used by debt collectors and private investigators to locate the whereabouts of a person who is hard to find. Field calls are a personal visit to someone’s address.
A well-funded TAFE wouldn’t require such a heavy-handed approach.
TAFE SA goes on to ask that all field calls are “conducted with the upmost professionalism” and that the contractor provides a draft version of all debt collection letters and texts.
“Incidences that may give cause to adverse public criticism must be avoided at all times,” the tender states.
Another part of the tender asks the contractor to “approach debt collection in a sensitive and understanding manner when dealing with low-income students, taking into consideration their capacity to pay”.
However, the successful debt collector is also required to recommend legal proceedings to TAFE SA “wherever necessary to recover high value debt”.
TAFE SA CEO David Coltman said having a debt recovery provider on contract is “standard business practice across tertiary education providers in Australia”.
“With a large number of organisations and students that we work with each year, there are circumstances where the recovery of unpaid fees and/or services are required,” he said in a statement.
TAFE SA did not respond to questions about how much unrecovered debt it has on its books. It also did not give details about the debt collection firm it currently has on contract and how much in unpaid fees that agency has recovered.
Coltman did say TAFE SA paused external debt collection “at the height of the pandemic”.
“During the COVID pandemic TAFE SA increased support to our students. This included students who were experiencing financial hardship,” he said.
“At the height of the pandemic we paused external debt collection activities and offered greater flexibility through a variety of initiatives for students with their fee payments.”
InDaily has previously reported on TAFE students who have been hit with unexpected fees of up to $10,000 after the State Government axed a subsidy for their course.
Australian Education Union SA Branch president Andrew Gohl said TAFE’s search for a debt collector was part of a “bigger problem which needs to be addressed”.
“A well-funded TAFE wouldn’t require such a heavy-handed approach,” he said.
“Vocational education and training should be recognised not only for [the] role it plays in teaching the essential skills for a range of industry but also for the benefits this public education institution and its work has the [for] the broader economy.”
Asked whether he would call on the State Government to scrap its search for a debt collector, Gohl said: “More so and in addition with 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 before deadline.
TAFE SA’s tender requires debt collection to be done “in accordance with current TAFE SA policies and subject to and conducted in line with all applicable Federal, State and Local laws”.
InDaily asked TAFE SA how it planned to ensure compliance from the new contractor. Coltman said it would “work with the provider to ensure there is consistency with TAFE SA Policy and Procedure”.
“At TAFE SA, we prioritise supporting all students who are experiencing financial hardship,” he said.
“This includes working with them through individual and personal circumstances, offering fees by instalment (payment plans), providing support and counselling for any welfare issues, and in some cases supporting our students to access emergency financial relief.
“The successful debt recovery provider will be utilised as one of a number of options available to support TAFE SA’s debt collection processes.”
TAFE SA defines outstanding debts as invoices that remain unpaid after passing through the training provider’s “debt collection cycle” and are still unpaid two weeks after a seven-day final demand letter has been issued.
Prospective contractors have been asked to specify a performance indicator outlining the percentage of TAFE SA’s debt they believe they can recover.
TAFE SA also states they can recall a debt within two business days “without penalty or charges or applied”.
Submissions for the tender close on June 2.
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