School quandary

The number of private schools in Singapore has mushroomed in recent years, cashing in on the government's aim to propel the city state as an education hub for the Asian region.

Attracting a large number of mainland Chinese, the schools are teaching everything from English language to early childhood education, electronic engineering and hospitality management, with students willing and able to fork out S$5,000 ($23,000) to S$20,000 for a diploma course or degree.

As with any successful business sector, a few entrepreneurs have been eager to jump into the pool and standards have not always been up to scratch. Over the years, the authorities have reported student complaints from poor academic standards to misrepresentation of course availability, accreditation or the school campus. There have also been problems in refunding tuition fees.

With competition for the US$2.2 trillion international student market intense, Singapore cannot afford the bad publicity a few rogue schools could quickly generate, so officials introduced a student protection scheme for all schools last year. It requires schools to deposit fees into a separate bank account that releases the money in instalments until students complete their studies, or to buy insurance policies in the name of their students.

A total of 209 schools have applied for the scheme and only 140 have made the grade.

While the scheme had the best long-term intentions, in protecting students and Singapore's reputation as an education hub (The sector contributes to 1.9 per cent of gross domestic product), it is also having some negative short-term effects.

Recently, the established AIT Academy and Unicampus closed leaving hundreds of students stranded, including a Chinese national who had enrolled and paid S$5,565 the day before the school announced its closure.

Students who enrolled in AIT this year are covered by the fee protection scheme and many have been offered a place in other schools at no additional tuition cost.

There are also concerns some of those schools are in financial trouble. Last year, listed education provider Informatics, which has offered to take in 250 AIT students, was rocked by an accounting scandal that overstated profit and revenue, which resulted in a police probe. It was still reportedly in the red in the first quarter.

Many professionals believe AIT may only be the tip of the iceberg and there could be rough months ahead for other schools if they cannot get their business in order.