New Delhi: Acting against profiteering institutional practices, the central government on Wednesday asked all colleges and universities to return admission fees and academic credentials of aspiring students if they withdraw or cancel their admission.

The existing practice in many institutions of collecting advance payment and not refunding this should be done away with, human resource development minister Prakash Javadekar said. This has prompted the ministry and the higher education regulator to end the practice, he said.

There is no official data, but sources in the ministry said that advance payments and no-refund of advance payments is an illegal industry worth more than 500 crore per annum.

For decades, students have complained that institutions take fees in advance and keep their education credentials such as school or college leaving certifications once they go for admission. If a student decides to withdraw his or her admission, most institutions do not refund the fee and take months to return their certificates, thus, preventing them from joining other institutions.

The decision taken by the centre on Wednesday will thus benefit millions of students pursuing higher education, including professional courses, Javadekar said. “Students of our country were facing several problems during admission due to coercive and profiteering institutional practices being adopted by some institutions... the institute will be required to refund fees in case a student withdraws from the programme," he said.

Colleges and universities will now be allowed to collect advance fees for a semester or for up to one year from a student, instead of the entire duration of a course.

In case of withdrawal of admission, institutions are liable to return between 50% and 100% of the amount, depending on when a student decides to vacate the seat. All returns by the institutions must be done within 15 days.

The government has also asked institutions to not collect original personal or academic certificates at the time of submission of the admission applications to reduce paperwork.

Higher education secretary R. Subrahmanyam said if institutions are found violating the rules, the UGC can withdraw grants, penalize colleges, make their names public, and also ask affiliating universities to withdraw affiliation, effectively making them illegal entities.