---
title: "International student refunds: the five flows, who pays whom, and where it goes wrong"
description: "A practical map of international education refunds: the five money flows between school, agent and student, commission clawbacks, OSHC, ESOS rules, Brazil's 7-day cooling-off, and the FX double-loss."
date: "2026-06-11"
category: "Business efficiency"
keywords: "Business efficiency"
author: "Raphael Arias"
cover: "/images/blog/international-student-refunds-five-flows.jpg"
lang: "en"
wordCount: 2674
url: https://qualyhq.com/blog/international-student-refunds-five-flows
---
## Site navigation

- [For schools](/international-education/for-schools.md) — For international education schools
- [For agents](/international-education/for-education-agents.md) — For international education agents
- [Explore](/training.md) — Watch videos on how to use Qualy
- [About](/about.md) — Learn about Qualy's mission and values
- [Pricing](/pricing)
- [5-min demo](/demo.md)
- [Login](https://dashboard.qualyhq.com)

# International student refunds: the five flows, who pays whom, and where it goes wrong

> A practical map of international education refunds: the five money flows between school, agent and student, commission clawbacks, OSHC, ESOS rules, Brazil's 7-day cooling-off, and the FX double-loss.

A refund in international education is never one payment — it's a chain. Depending on who collected the money and whether commission was already deducted, the refund travels one of five routes between school, agent and student, each with its own failure points. Add the legal layer (Australia's ESOS rules, Brazil's 7-day cooling-off), the OSHC layer (the insurer refunds separately, on its own rules), and the FX layer (money converted twice loses twice), and "just send it back" becomes one of the most error-prone processes in the industry.

Nobody opens an education agency or a school's admissions office because they're excited about refunds. So nobody designs the refund process — it just accretes, one improvised case at a time, until the day a visa refusal, a withdrawal, or a provider collapse forces everyone to discover, live, that three parties have three different ideas about who owes what to whom.

The core insight that makes refunds manageable: **the refund must retrace the path the money took in — including the commission**. Once you see the five distinct paths, every messy case becomes a known case.

## The five refund flows

**Flow 1: School → student.** The simple one. The student paid the school directly, the school refunds the student directly. The only complications are legal (how much, how fast — see below) and mechanical (refunding to the same account/currency the money came from, which matters more than people think — see the FX section). If the school paid commission on this student, it claws that back from the agent separately, and the student's refund shouldn't wait for that to happen.

**Flow 2: Agent → student.** The student paid the agency (a deposit, a placement package, pre-paid tuition the agency hasn't yet forwarded), and the trigger — say, a visa refusal — arrives before the money moved on. The agency refunds from its own client funds. This is the flow that exposes whether an agency actually segregates client money from operating money. If your refund policy is "we'll refund once the school refunds us", but the money never reached the school, you don't have a refund policy — you have a liquidity confession.

**Flow 3: School → agent → student.** The student paid the agency, the agency forwarded gross tuition to the school, and now the school refunds back along the same chain. Two hops means two delays and two sets of banking fees, and the student sees none of it — they just see week three with no money. The agency in the middle carries an uncomfortable duty: pass the refund through promptly and completely. Holding a student's refund in the agency account "while we deduct our service fee" is where agencies get into reputational — and in some markets legal — trouble. If a fee is genuinely owed, invoice it transparently; don't net it silently out of a refund.

**Flow 4: Agent → school → student (the commission unwind).** The agency collected tuition, deducted its commission, and remitted net to the school. Now the school must refund the student *more than it ever received*. So the refund has a prerequisite: the agency returns the commission (or the school offsets it against the agency's future claims), and only then is the student made whole. This is the single strongest operational argument against net remittance — we cover the gross-vs-net fight in detail in our [guide to how agent commissions work](/blog/how-education-agent-commissions-work.md). Every week of arguing about the clawback is a week an actual student is out actual money.

**Flow 5: The separate tracks — OSHC and other non-tuition items.** Here's the one that surprises everyone the first time: the tuition refund and the insurance refund are **different refunds, from different organisations, on different rules**. In Australia, Overseas Student Health Cover is a policy between the student and the insurer — even when the school or agent arranged it and collected the premium. If the student never arrives, or leaves early, the *insurer* refunds the unused premium, calculated pro-rata on its own terms, usually requiring its own application with evidence (visa refusal letter, departure proof). The school refunding tuition does not — cannot — refund the OSHC. The same separation applies to homestay deposits, airport pickups, and materials fees collected on behalf of third parties. A refund process that doesn't itemise these will either over-refund (school eats the OSHC) or under-refund (student never learns they can claim it).

## The legal layer: what the law forces, where

The five flows describe the plumbing. The law decides the volume and the deadline, and it varies dramatically by market. Two examples bookend the range.

### Australia: ESOS, defaults, and the TPS

Australia regulates international student refunds more explicitly than almost anywhere, through the ESOS framework. The key concepts:

**Student default** — the student withdraws, breaches visa conditions, or doesn't show. What the school must refund is governed by the written agreement, within the limits of the ESOS refund rules (a revised *Calculation of Refund* instrument took effect on 1 October 2024). Crucially, **if the default happened because the student's visa was refused**, the protection is strong: for a refusal before the course starts, the student is entitled to their course money back less an administrative deduction capped at **5% or AUD 500, whichever is lower** — and where the visa-refusal rule applies, the provider must pay within **four weeks**.

**Provider default** — the school closes, cancels the course, or can't deliver it. The refund owed is calculated week-by-week: the weekly tuition fee times the weeks of the default period — the student gets back exactly the teaching they paid for and didn't receive. If the provider can't pay, the **Tuition Protection Service (TPS)** steps in: a government scheme that places affected students in a comparable course or refunds unspent tuition. Agents advising nervous students can say with a straight face that prepaid tuition in Australia has a statutory backstop.

For agencies, the practical reading of ESOS: never promise a student a refund outcome the written agreement doesn't support, and never let your own service-fee arrangements blur into the tuition the law protects. The Commonwealth Ombudsman publishes plain-language factsheets on exactly this, and they are worth handing to counselors verbatim.

### Brazil: the 7-day right of regret

At the other end of the spectrum from Australia's sector-specific rulebook sits a general consumer right with teeth. Brazil's Consumer Defence Code (CDC), Article 49, gives consumers a **7-day cooling-off period** — the *direito de arrependimento*, literally the right of regret — for any purchase made **outside a physical storefront**: online, by phone, by WhatsApp. The consumer can cancel within seven days of signing or receiving the service, no reason required, and is entitled to **everything back, immediately, with monetary correction**.

Now consider how a Brazilian student actually buys an exchange program: a WhatsApp conversation with a counselor, a contract signed electronically, a Pix payment. That is a distance sale. The cooling-off right applies to the agency's contract, and a "non-refundable enrolment fee" clause does not override a statute. Brazilian agencies know this dance; foreign schools and platforms selling directly into Brazil often don't, and discover Article 49 via a PROCON (consumer protection agency) complaint or a chargeback they can't contest. If you sell to Brazilians remotely — and in this industry, who doesn't — your refund process needs a seven-day, no-questions lane, and your cash management needs to assume some percentage of signed contracts will use it.

Between these two poles, every market adds its own wrinkle — UK consumer cancellation rights, EU distance-selling rules, US state-by-state variation, mandatory mediation in some Latin American countries. The pattern to internalise: **the strictest applicable law wins, and it's often the consumer law of the student's country, not the education law of the destination.**

## The FX double-loss: the refund's silent tax

One more layer, and for the student it's often the most expensive one. Tuition that crossed a border was converted once on the way in — at a rate with a spread in it. Refund it through the same kind of channel and it converts again, with another spread, plus fresh wire fees, plus whatever the intermediary banks skim. A student who paid the equivalent of AUD 20,000 from Brazil and is refunded in full can easily receive 4–6% less in reais than they originally paid, having done nothing wrong. We've written about where these costs hide in [the hidden costs of international payments in education](/blog/hidden-costs-international-payments-education.md).

There are two honest mitigations. First, **refund to the original payment method and currency** wherever the rails allow it — a Pix payment refunded as a Pix reversal in reais, a SEPA debit refunded as a SEPA credit — so at most one conversion ever happens. Second, **time-box the unwinding**: most of the double-loss horror stories involve refunds routed through improvised channels (a counselor's personal transfer service, a school wiring to whatever IBAN the student emailed) because the original rail had no refund path. This is squarely a payments-infrastructure problem, and it's one of the quieter reasons schools and agencies use Qualy: when the collection and the refund live on the same platform, the refund follows the payment's path backwards — same rail, same currency, commission unwind handled in the same ledger, every party seeing the same state. Flat fee, no second spread.

## A refund policy worth having

We've turned everything above into a working tracker — one row per case, mapped to its flow, with deadline countdowns, clawback tracking and OSHC reminders built in:

Pull it together and the checklist writes itself. Map every incoming payment to one of the five flows *at collection time*, so the refund path is known before it's needed. Segregate client money so Flow 2 is never a liquidity event. Write the commission clawback into every agent agreement and execute it independently of the student's refund. Itemise OSHC and third-party amounts so students claim what's theirs from the right counterparty. Encode the legal floors — ESOS timelines, Article 49's seven days, and their local equivalents — as deadlines in your process, not as trivia your most experienced person carries in their head. And refund on the rail the money arrived on.

None of this makes refunds pleasant. It makes them boring — which, for a process that only runs when someone's plans have already fallen apart, is the highest available compliment.

## Sources

- [Australian Government Department of Education — Tuition Protection Service: information for international students](https://www.education.gov.au/tps/international-students)
- [Commonwealth Ombudsman — International students: fees and refunds factsheet](https://www.ombudsman.gov.au/__data/assets/pdf_file/0034/79684/Factsheet_student_fees-and-refunds-links-fixed-A1576259.pdf): the visa-refusal refund (full refund less the lower of 5% or AUD 500, paid within four weeks) and student/provider default rules.
- [ESOS refund specification factsheet](https://internationaleducation.gov.au/Regulatory-Information/Documents/Fact%20Sheet%20ESOS%20refund%20specification%2040714%20(2).pdf): the weekly-fee × default-period calculation for provider defaults.
- [Educli — Revised ESOS (Calculation of Refund) Instrument 2024](https://www.educli.com/blog/2024/10/09/education-providers-in-australia-note-a-revised-education-services-for-overseas-students-calculation-of-refund-instrument-2024-came-into-effect-on-october-1-2024/): in effect since 1 October 2024.
- [Commonwealth Ombudsman — OSHC factsheet](https://www.ombudsman.gov.au/__data/assets/pdf_file/0025/88324/Factsheet_student_OSHC.pdf): the insurer-side refund of unused premium.
- Brazil, Código de Defesa do Consumidor (Law 8.078/1990), Article 49: the 7-day cooling-off right for purchases made outside the seller's premises, with immediate refund including monetary correction.

## Frequently asked questions

### Who refunds an international student — the school or the agent?

Whoever the refund chain requires, which depends on the path the money took in. If the student paid the school directly, the school refunds directly. If the money is still with the agency, the agency refunds it. If the agency forwarded it to the school, the school refunds through the agency, which must pass it on promptly and completely. The one constant: the refund retraces the original payment path, including any commission that has to be unwound.

### What happens to the agent's commission when a student is refunded?

Most agent agreements contain a clawback clause: if tuition is refunded, the school can demand the related commission back or offset it against the agency's future claims. Where the agent deducted commission before remitting (net remittance), the school cannot make the student whole until the commission comes back — which is why refunds are the strongest argument for keeping tuition and commission as separate, transparent payments.

### Is OSHC refunded together with tuition?

No. OSHC is a policy between the student and the insurer, even when a school or agent arranged it and collected the premium. If the student never arrives or leaves early, the unused premium is refunded by the insurer, pro-rata, through the insurer's own application process — typically requiring evidence like a visa refusal letter or proof of departure. A tuition refund from the school never includes the OSHC; students who aren't told this simply lose that money.

### What refund is an international student entitled to if their Australian visa is refused?

Under Australia's ESOS framework, a student whose visa is refused before the course starts is entitled to a refund of their course money less an administrative deduction capped at the lower of 5% of the fees or AUD 500. Where the visa-refusal rule applies, the provider must pay within four weeks of the default. After the course has started, refunds follow the ESOS refund calculation rules and the written agreement.

### What is the Tuition Protection Service?

The TPS is an Australian Government scheme that protects international students when a provider defaults — closes, cancels a course, or stops delivering it. Affected students are placed in a comparable course with another provider or refunded their unspent tuition, calculated as the weekly tuition fee multiplied by the weeks of teaching not delivered. It is the statutory backstop that makes prepaying tuition in Australia a contained risk.

### What is Brazil's 7-day cooling-off rule?

Article 49 of Brazil's Consumer Defence Code gives consumers seven days to cancel any purchase made outside a physical storefront — online, by phone, or via WhatsApp — with no reason required and a full, immediate refund including monetary correction. Since most education-agency sales to Brazilian students are exactly such distance sales, the rule applies to enrolment fees and packages regardless of any "non-refundable" clause in the contract.

### Why do students lose money on refunds even when refunded in full?

Currency conversion, twice. The payment was converted once on the way in, with a spread; a refund sent through a similar channel converts again, with another spread plus wire and intermediary fees. A fully refunded student can easily receive several percent less in their home currency than they paid. The fix is refunding on the original rail and currency — a Pix payment back as Pix in reais, a SEPA debit back as a SEPA credit — so the money converts at most once.

### Can an agency deduct its service fee from a student's refund?

Only if a clearly agreed, separately documented fee is genuinely owed — and even then the transparent route is to invoice it, not to silently net it out of money passing through. In several markets, consumer law (like Brazil's CDC) or education regulation limits what can be withheld, and a "non-refundable fee" clause does not override statute. Holding or shaving refunds in transit is the fastest way for an agency to convert one cancelled enrolment into a regulator complaint.

### How fast should a refund be processed?

As fast as the strictest applicable rule, and the strictest rule is often the student's home consumer law rather than the destination's education law. Australia's visa-refusal rule requires payment within four weeks; Brazil's cooling-off refund is immediate in principle. Internally, the realistic benchmark is days, not months — most delay comes from unmapped refund paths, commission disputes, and improvised cross-border transfers rather than from any legal requirement.

## Related articles

- [How education agent commissions work: rates, gross vs net, and getting paid on time](/blog/how-education-agent-commissions-work.md)
- [The Hidden Costs of Payments in International Education: What You Need to Know](/blog/hidden-costs-international-payments-education.md)
- [Student payment reminders: a complete guide](/blog/student-payment-reminders-complete-guide.md)

## More on Qualy

**Industries**

- [For schools](/international-education/for-schools.md) — For international education schools
- [For agents](/international-education/for-education-agents.md) — For international education agents

**Support**

- [Training](/training.md)
- [System status](https://qualyhq.statuspage.io/) — Qualy system status
- [Product updates](https://changelog.qualyhq.com) — As we work on Qualy, here we spotlight what we’ve learned and updated across our products
- [Contact](/contact-us.md)

**Product**

- [Demo](/demo.md)
- [Enterprise](/enterprise.md)
- [Testimonials](/testimonials.md) — Learn what some customers have to say about Qualy
- [About](/about.md) — Learn about Qualy's mission and values
- [Blog](/blog) — International education payments blog by Qualy
- [Trust center](/trust.md)
- [API](/api.md) — Qualy API for international education payments
- [Zapier](/zapier.md) — Connect Qualy to 7,000+ apps with Zapier

**Legal**

- [General terms](/terms-and-conditions.md)
- [Payer terms](/terms-for-payers.md)
- [Privacy policy](/privacy-policy.md)
- [BECS DDR](/becs-dd-service-agreement.md)