Student Visa Refused? How the Refund Formula Works and What to Tell Clients (2026)

If a student visa is refused and that refusal is what stops the student from starting the course on the agreed day, the refund is not negotiated — it is calculated. The refund equals the course fees minus the lesser of 5% of the course fees the provider received before the default day, or $500. That formula is set out in subsection 10(2) of the Education Services for Overseas Students (Calculation of Refund) Instrument 2024, made under subsections 46D(7) and 47E(4) of the Education Services for Overseas Students Act 2000 (ESOS Act), as published on the Federal Register of Legislation as at the September 2026 official text.

Where the refund formula comes from

The 2024 instrument is a legislative instrument under the ESOS Act, and it repeals the earlier Education Services for Overseas Students (Calculation of Refund) Specification 2014 in full. It commences the day after it is registered.

Most of the words an agent needs are defined outside the instrument. Section 4 notes that expressions including agreed starting day, course, default, default day, overseas student, provider, student visa and tuition fees are defined in section 5 of the ESOS Act. The instrument adds its own definition of student as an overseas student or an intending overseas student.

Section 10 deals specifically with student visa refusals. Sections 6 to 8 cover a different situation — provider default — using a weekly tuition fee and weeks in the default period, both rounded up to the nearest whole dollar or whole number. Section 9 covers the case where a provider has not entered into an agreement meeting the requirements of section 47B of the ESOS Act.

What counts as "course fees" in the calculation

Subsection 10(3) defines the course fees for a course as the sum of two things:

the tuition fees received by the provider in respect of the student; and
the non-tuition fees, if any, received by the provider in respect of the student.

Both limbs are about money actually received, not money invoiced. This is the point where client conversations most often go wrong: non-tuition amounts a provider has collected for the student sit inside the refund base, so the starting figure is larger than "tuition" alone.

How do you run the calculation, step by step?

List every tuition fee payment the provider received for the student.
Add any non-tuition fees the provider received for the student.
Treat that total as the course fees.
Identify the default day for the enrolment.
Work out how much of the course fees the provider received before that day.
Calculate 5% of that amount.
Compare it with $500.
Take whichever figure is smaller.
Subtract it from the course fees.

Two hypothetical illustrations, using the rule rather than any real file:

Course fees received before the default day	5% of that amount	Deduction (lesser of 5% or $500)	Refund
$20,000	$1,000	$500	$19,500
$6,000	$300	$300	$5,700

The two figures meet at $10,000. Below that, 5% is the smaller amount and applies; above it, the $500 cap applies.

One reading note worth flagging to clients: the subtraction is taken from the amount of the course fees, while the 5% limb is calculated on course fees received before the default day. Where every payment was received before the default day, the two bases are the same.

Which refusal situations does section 10 cover?

Subsection 10(1) directs the reader to subsections (2) and (4).

Subsection 10(2) applies where the student was refused a student visa and the refusal caused the student to fail to start the course at that location on the agreed day, consistent with subparagraph 47D(5)(b)(i) of the ESOS Act. This is the limb with the published "lesser of 5% or $500" formula.

Subsection 10(4) applies where the refusal caused the student to withdraw from the course at that location, or to fail to pay an amount they were liable to pay the provider in order to undertake the course, consistent with subparagraphs 47D(5)(b)(ii) and (iii). That limb is calculated under subsection 10(4) of the instrument, and the operative text should be read in the instrument itself as currently published.

Two conditions run through every limb. The trigger is a refusal of a student visa, and the refusal has to be the cause of the outcome. A student who does not start for other reasons is not in the section 10 refusal scenario.

Why a refund result is not a visa result

The refund calculation does not read the visa decision. It reads amounts received by the provider, the default day, and the causal link between the refusal and the student's failure to start. Nothing in section 10 turns on the strength of the application, the refusal reason, or whether the student later challenges the decision.

That separation is what protects the client conversation. An agent can explain the deduction cap without commenting on the visa outcome at all, and can confirm the arithmetic without predicting what any provider will in fact pay in a given file. It also rules out the two extreme stories clients arrive with — "a refusal means nothing comes back" and "a refusal means everything comes back". The rule is a capped deduction from a defined base.

What should you tell the client?

The base is what the provider received: tuition fees plus any non-tuition fees.
The provider's deduction is capped at the lesser of 5% of the course fees received before the default day, or $500.
The 5% limb applies where the refusal is what stopped the student from starting at that location on the agreed day.
Withdrawal and non-payment outcomes sit in a different subsection and are calculated differently.
Do not quote a processing time, a payout date, or an outcome. This article is general information about how the rule is written, not personalised advice for a particular enrolment, contract or client, and the text of the instrument and the ESOS Act as officially published and currently in force remains the authority.

Frequently Asked Questions

Is the deduction 5% or $500?

It is the lesser of the two, not both and not whichever the provider prefers. The provider works out 5% of the course fees received before the default day, compares that with $500, and deducts the smaller figure. In practice, $500 applies once course fees received exceed $10,000.

Do non-tuition fees count toward the refund?

Yes. Subsection 10(3) defines course fees as the sum of the tuition fees received by the provider and the non-tuition fees, if any, received by the provider in respect of the student. Anything collected by the provider and falling outside tuition still enters the base if it is a non-tuition fee received for the student.

Does every student visa refusal produce a refund?

No. Subsection 10(2) requires the refusal to have caused the student to fail to start the course at that location on the agreed day. A refusal that happens alongside some other reason for not starting does not, on its own, activate this calculation.

What if the student withdrew instead of never starting?

Withdrawal, and failure to pay an amount the student was liable to pay, are handled under subsection 10(4), which refers to subparagraphs 47D(5)(b)(ii) and (iii) of the ESOS Act. The calculation for that limb is set out in subsection 10(4) and should be read in the instrument as currently published.

Which instrument applies — the 2024 one or the 2014 one?

The Education Services for Overseas Students (Calculation of Refund) Instrument 2024 repeals the whole of the Education Services for Overseas Students (Calculation of Refund) Specification 2014, under Schedule 1. The 2024 instrument commences the day after it is registered.

Does the refund depend on what the provider actually received?

Yes. Every figure in the section 10 refusal formula is built on amounts received by the provider in respect of the student, including the 5% limb, which is calculated on course fees received before the default day. Amounts invoiced but not received are not part of the calculation.

References

Federal Register of Legislation — Education Services for Overseas Students (Calculation of Refund) Instrument 2024