Punjab proposes 5% cap on private school fee hikes, refunds for excess charges and stricter penalties

The Punjab government has unveiled a proposed regulatory framework aimed at tightening oversight of private school fees, including a 5% annual ceiling on fee hikes, mandatory refunds of excess fees collected from parents and a graded penalty system that could ultimately result in cancellation of a school's recognition.

Chief Minister Bhagwant Singh Mann announced the measures on Wednesday, describing the proposed legislation as the country's strictest law against arbitrary fee increases by private schools. The law is expected to be introduced during the forthcoming Assembly session.

The proposed framework will apply to all private schools in Punjab. According to the government, the 5% ceiling will cover not only tuition fees but also all mandatory charges and funds collected by educational institutions, limiting the scope for additional fee collections under separate heads.

Government cites concerns over fee regulation

Addressing a press conference, Mann said private unaided schools are currently regulated under the Punjab Regulation of Fee of Unaided Educational Institutions Act, 2016, which was amended in 2019.

He said the original legislation limited annual fee hikes to 8% of the previous year's fee but subsequent amendments introduced a disclosure mechanism that allowed schools to increase fees beyond the prescribed limit, subject to public disclosure requirements.

"The Punjab Government has decided to put a cap of 5% on annual fee hikes so that no school can increase fees beyond this limit. We will bring an Ordinance in this regard. Schools that have increased fees by more than 15% during the last three years will face strict action. The original 2016 Act clearly stipulated that fee hikes should not exceed 8% of the previous year's fee, but this provision was diluted through amendments introduced by the previous government," Mann said.

The Chief Minister argued that while the law required schools to publish proposed fee increases on notice boards and websites, enforcement remained weak, allowing substantial fee hikes in several institutions.

Refunds and scrutiny of past fee increases

The state government said schools that increased fees beyond the proposed limits during the last three years would face scrutiny and could be directed to refund excess amounts collected from parents.

In a post on X, Mann said the government had received numerous complaints from parents regarding fee increases and had decided to take corrective action.

The government also announced that all pending complaints related to excessive fee hikes would be examined by the authorities.

Regulatory body to strengthen oversight

The existing legal framework provides parents with the right to challenge fee increases before a district-level Regulatory Body. Complaints are required to be scrutinised within 15 days and decided within 60 days.

The body is headed by the Deputy Commissioner or Additional Deputy Commissioner and includes the District Education Officer (Secondary) as Member Secretary along with nominated members.

According to the government, the Regulatory Body has powers comparable to those of a civil court while examining cases. It can assess whether fee increases are justified by expenditure, prevent profiteering and verify that money collected from students is used only for educational purposes.

"The Regulatory Body will keep a close watch on excessive fee hikes. It will ensure that any increase in fees is justified by actual expenditure or developmental activities and does not result in profiteering. It will also ensure that funds collected from students are not diverted for any other purpose," Mann said.

Penalty structure and audit proposals

The government said schools found violating fee regulations would face a graded penalty regime. Existing provisions allow penalties ranging from ₹30,000 to ₹1 lakh for a first violation, depending on the category of school. Repeat violations attract higher fines, while a third violation can result in withdrawal of recognition or affiliation.

The Regulatory Body also has the authority to order refunds of excess fees.

The state government is additionally considering a financial audit mechanism for private schools. One proposal under examination involves empanelling chartered accountants to review fee collections, expenditures, salary payments, infrastructure investments and other financial records from the previous three to five years.

Officials said such audits could help determine whether fee hikes were justified and whether collected funds were used for educational purposes.

Ordinance aimed at increasing transparency

The proposed ordinance is intended to strengthen enforcement of fee regulations, improve transparency in fee fixation and provide parents with greater recourse against arbitrary fee increases.

Describing the move as a major intervention in the education sector, Mann said the objective was to curb exploitation and ensure that educational institutions function without profiteering.

"This legislation is intended to stop the exploitation of students and their families. No child should ever be pushed into despair because of the high-handedness of institutions demanding exorbitant fees. Punjab will have the toughest law in the country against unregulated fee hikes by private schools," he said.