Charging of exorbitant fees in private schools is a major cause of concern in India. Steep hike in tuition fees along with additional costs such as fees for transport, extra-curricular activities and sports will add much burden on parents.

Regulating school fees is one of the most significant legal and political challenges policymakers in India face.

Schools justify their fee hike as the costs of maintaining a fully functional private school with quality teaching and world-class infrastructure are quite steep.

In this context, balancing the autonomy of private schools and their public welfare function becomes a contentious issue.

Can private schools arbitrarily hike fees?

Parents in urban areas are increasingly turning to private schools, where learning outcomes are better. However, with more autonomy these private institutions are charging exorbitant fee.
The constitutional basis for regulating the fees charged by private schools was considered by the Supreme Court in T.M.A. Pai Foundation v. State of Karnataka (2002).

The Supreme Court held that regulatory measures imposed on private schools must ensure the maintenance of proper academic standards, atmosphere and infrastructure and the prevent maladministration
In Islamic Academy of Education and Anr. v. State of Karnataka and Ors (2003),a Constitution Bench of the Supreme Court held that these institutions can have the autonomy to generate “surplus” which must be used for their betterment and growth. However, the word ‘surplus’ is not clearly defined.

Last year, the Supreme Court ruled that any private school in Delhi running on land allotted by the Delhi Development Authority (DDA) has to take the permission of the Delhi government before hiking the fees.
While private schools have the autonomy to generate surplus, there has to be a balance between autonomy of such institutions and the measures taken to prevent commercialization of education.

How did different states respond to prevent schools from charging exorbitant prices?
Several State governments have either enacted fee regulation laws or are in the process of framing them.

Tamil Nadu follows the fee fixation model whereby a government committee is empowered to verify and approve fee structures proposed by private schools.

Karnataka is for a formula that caps fees for schools by way of framing rules under its school education legislation.

Maharashtra has a weakly enforced legislation to regulate fees and has multiple government bodies to approve school fees. Recently, the Maharashtra government’s decision to cap proposed fee hikes at 15% was widely criticised by schools.

The Self-Financed Independent Schools Act 2017 of Andhra Pradesh, which encourages private schools to open, gives them freedom of admission and fees, and removes corruption from board affiliation.
In Kolkata, about 5,500 Government-aided schools have been brought under the direct control of the State Government.

Recently, the Gujarat High Court has upheld the Gujarat Self-financed Schools (Regularization of Fees) Act, which imposes caps on the fees that private schools can charge, as legally valid.Though it is now being reconsidered by the Supreme Court. The court has directed the government to not take any coercive steps against schools in the interim period.

Then why is there a concern?
Different State’s models to curb fee hike menace are affected by the challenges of weak implementation, a lack of capacity and constant legal challenges posed by private school associations.

According to the CAG report, it is found that many private schools collect money from parents under false heads, while at the same time,teachers are being underpaid, and accounts misrepresented.

Existing legislative efforts have made an incomplete assessment of the deeper problems with financial management and accounting practices adopted by private schools.

What are some of the considerations for effective policy?
Efforts are on to regularise the fee structure in the Indian schools. Following are some of the considerations for effective education policy.

There needs to be a jurisprudential clarity on what private schools can or cannot do, how much “surplus” they can make, or what “commercialisation” actually means.

The state should clearly articulate the objectives behind regulating fee. It must be acknowledged that schools are free to set their fee structure and the state can only verify whether the fee charged is reasonable and does not amount to profiteering.

There is a need for transparency in private school finances. For instance, to Andhra model, we can add a requirement for extensive disclosure on each school’s website giving all fees, staff qualifications, details of infrastructure, strengths and weaknesses for parent to know before selecting a school.

The measures such as regular government supervised audits, generating capacity in State-level Departments of Education, regular inspections, and stricter sanctions for fraudulent reporting could be considered.

A fee hike should be used for improving the quality of education and not for profiteering.

It is also crucial that a regulation strikes a balance between protecting the interests of students and parents, and preserving the autonomy of schools.