China Says Government to Set Prices for After-School Classes

(Bloomberg) — China said local governments should set the fees for after-school tutoring institutions that offer compulsory education subjects, another step in the country’s efforts to overhaul the private education sector. 

Local governments should establish benchmark fees and floating ranges, and include them in pricing catalogs, according to a notice from the National Development and Reform Commission. Price increases from the standard level will be capped at 10%. Local governments need to release their standard price for private tutors and related polices by the end of 2021.

Beijing unveiled a sweeping overhaul of its private education sector in July, banning companies that teach school curriculums from making profits or raising outside capital. It also banned any tutoring for school subjects during vacations or holidays.

The shares of companies such as TAL Education Group, New Oriental Education & Technology Group and Gaotu Techedu Inc., once stock market darlings, have all tumbled. 

Other key points from the notice:

  • After-school class providers should not spend more than 3% of revenue earned from classes on advertising
  • Classes should be categorized under three broad types: those with fewer than 10 students, those with 10 to 35 people, and those with more than 35
  • Standard classes should last 30 minutes online, physical lessons should run 45 minutes
  • Local governments should tighten supervision around rules on collecting tuition fees
  • Class brochures, teachers’ certificates and financial performance reports should be submitted for government review annually

Why China Is Cracking Down on After-School Tutoring: QuickTake

That was a dizzying reversal after the education sector had surged from robust demand and drawn funding from venture capital firms and public investors. The out-of-school education system had been “severely hijacked by capital,” according to an article posted on the site of the Ministry of Education. 

Officials have said the goal is to promote equality and decrease the burden of education on children. It coincides with Beijing’s efforts to increase the birth rate as the country faces demographic challenges.

The NDRC also called for education institutions to improve their disclosure of class content and charging practices, while local governments organize and implement the new standards.

(Updates with more details from the statement from the 5th paragraph)

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