Tutoring Companies Stop Taking Payments as Nonprofit Deadline Looms
China’s top education authority has advised all curriculum-based tutoring companies to stop selling classes until they’ve successfully converted into nonprofit organizations, state news agency Xinhua reported Tuesday.
In a post on the microblogging platform Weibo, Xinhua wrote that the Off-Campus Training Institutes Supervision Department at the Ministry of Education requires that tutoring schools meet an end-of-year deadline to convert to nonprofits, and that the companies should stop accepting payments immediately.
Staff at leading tutoring companies Xueersi and New Oriental in Shanghai on Wednesday confirmed they’re not admitting new students and their online payment channels have been closed.
Tutoring companies have been allowed to accept prepayment up to three months in advance, meaning the last lessons sold before Tuesday’s cutoff will be exhausted around the end of this year.
The payments freeze ensures that the once-vast for-profit tutoring industry will be largely dissolved by the end of the year. China’s extracurricular tutoring market was worth around 2 trillion yuan ($310 billion) before the government in late July banned education companies from offering lessons on academic subjects on weekends or holidays, a policy that effectively outlawed most tutoring. Businesses targeting primary and junior middle school students accounted for approximately 40% of all tutoring companies, according to state-run media. By the end of 2020, the country had over 3 million education training companies.
Chu Zhaohui, a researcher at the state-run National Institute for Education Sciences, said that the move is intended so that companies have exhausted their contracts with students by the time the deadline rolls around.
“They’re trying to make sure tutoring companies take action to stop registrations,” Chu told Sixth Tone. “Without the new requirement, institutes could continue to charge students in the remaining two months, but their business might go bust because they won’t be operating legally.”
A Shanghai parent, whose child received tutoring from a US-listed tutoring company, said she has prepaid for classes through late December. “If the organization fails to go nonprofit by the end of this year, it will probably mean the end of extracurricular academic tutoring for my child,” she told Sixth Tone, declining to be named due to privacy concerns. “But that doesn’t mean the needs are gone. I’ll keep looking for other options.”
Chu believes it would be hard for companies to survive if they adopt a normal nonprofit model, adding that the change will also negatively impact the incomes of people working in the tutoring sector. “Their salaries will definitely drop,” he said.
By late September, leading tutoring companies had announced either plans to end in-person businesses or major layoffs. So far, no major player has discussed plans to go nonprofit. Leading Chinese tutoring companies listed in the US stock markets have continued to be trading on Tuesday. None has announced plans to delist.
Editor: David Cohen
(Header image: Students enter a classroom at an English tutoring center in Nanjing, Sept. 25, 2021. IC)