India's K-12 education sector is projected to grow at a CAGR of 10.7%, reaching USD 125.8 billion by FY32. While both opportunities and challenges abound in this ecosystem, one of the persistent concerns pertains to the widespread divergence across different States in India in the mechanisms for fee approval and collection, which creates regulatory and financial uncertainty for schools, parents, and investors alike.
While most States have no regulatory standards, a few (Assam, Gujarat, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu, and Uttar Pradesh) have adopted fee-control frameworks, although with varying scope and effectiveness. The latest addition to this list is Delhi, which has notified the Delhi School Education (Transparency in Fixation and Regulation of Fees) Act, 2025 (Act) on August 14, 2025. This Act seeks to establish a clear, accountable, and legally binding system for how schools in Delhi, including private unaided schools and minority educational institutions, set, approve, and collect fee. It is intended to strengthen the extant Delhi School Education Act, 1973 and align with the National Education Policy, 2020, particularly to curb arbitrary fee hikes and bring much-needed transparency into the governance of school fee in the capital.
This article examines the Act through the lens of key stakeholders such as students and parents, school management, business operators, and investors in Delhi's K–12 education sector. Some of the key aspects of the Act are as follows:
- Definition of 'school'
- The Act provides a comprehensive definition of 'school' that includes all private unaided institutions from the elementary/pre-primary level up to senior secondary, irrespective of whether they are recognised by the Government or affiliated to Indian or foreign boards.
- This broad definition is important as it establishes the precise category of schools subject to regulation in Delhi, addressing the long-standing regulatory ambiguity that persists in most Indian States with respect to school fee governance.
- Both recognised and unrecognised private schools in Delhi are brought within a uniform statutory framework for fee regulation.
- The definition expressly includes minority-status educational institutions as well as those operating on concessional Government land.
- Three-tiered mechanism for fee regulation
The Act establishes a three-tier framework comprising the following levels:
- School level – School Level Fee Regulation Committee (SLFRC): The SLFRC, to be constituted by 15 July each academic year, includes parent representatives, a nominee of the Director of Education (DoE), teachers, and school management. It reviews and approves proposed fee structures, ensuring participatory decision-making and transparency at the school level. Importantly, the SLFRC requires unanimous approval of its members for any fee decision, effectively granting parent members veto power.
- District level – District Fee Appellate Committee (DFAC): At the second level, disputes may be appealed within 30 days to the DFAC, chaired by the Deputy DoE and comprising zonal education officers, financial experts, and representatives of schools and parents. The DFAC provides an independent forum and acts as a check on excesses or disputes at the institutional level.
- State level – Revision Committee: Finally, the Revision Committee, chaired by an eminent educationist and including finance professionals, senior education officials, and representatives of parents and schools, serves as the ultimate authority. Its decisions are final and binding for 3 academic years, ensuring consistency and harmonisation of decisions across districts.
- Limited judicial review and Court
interference
- The Act bars the jurisdiction of Civil Courts on any matter in the purview of the SLFRC, DFAC, and Revision Committee, thereby reducing the propensity for protracted litigation.
- Fee proposal for 3 years
- Management must submit a fee proposal for 3 academic years to the SLFRC for approval, with the SLFRC empowered to reassess and determine the amount afresh at the time of sanction.
- Schools are prohibited from collecting fee in excess of those fixed or approved under this framework.
- Factors to be considered in fee determination include the school's location, standard of education, and administrative expenses.
- Penalties
The Act prescribes stringent penalties for violations:
- First offences attract fines of INR 1-5 lakh, while fines for repeat offences can rise to INR 2-10 lakh.
- Where excess fee are ordered to be refunded, failure to comply doubles the fine after 20 days, triples it after 40 days, which escalates further until payment is made.
- In case of repeated violations, sanctions can extend to suspension or withdrawal of recognition, curbs on revising fee, or even takeover of school management, underscoring the Act's intent to enforce one of the strictest fee-control regimes in India's K–12 sector.
- Additionally, harassment of students for recovering fee through coercive methods can lead to INR 50,000 per student in fines for the school.
- Government powers during force
majeure
- The Act empowers the Government to regulate fee structures during force majeure events such as natural calamities, epidemics, wars, floods, or civil commotions.
- During such events, private schools often impose steep fee hikes to offset increased operational costs – in order to shield parents from such financial burden, the Act authorises the Government to freeze or regulate fee during crises.
- Prohibition on coercive fee-recovery methods
- Coercive recovery methods – such as striking a student's name off rolls, withholding results, denying classroom participation, or subjecting students to humiliation – are expressly prohibited.
- Any violation will invite a fine of INR 50,000 per student.
While the Act strengthens transparency and seeks to curb profiteering, certain provisions raise concerns about its practical implementation and long-term effectiveness:
- Lack of clarity on 'reasonable' fee: The Act does not define what constitutes a reasonable fee level. This ambiguity could result in inconsistent enforcement, with scope for committee members to steer decisions based on personal opinion or influence. The absence of objective benchmarks risks bureaucratic delays, judicial scrutiny, and unpredictability for both schools and parents.
- Threshold for complaints: Requiring at least 15% of parents to jointly challenge the SLFRC or DFAC's acceptance of a fee proposal makes grievance redressal difficult due to logistical constraints, particularly in larger schools.
- Escalating fines for refunds: While deterrent in nature, steeply escalating fines for delayed refunds may impose operational strain on schools, risk rigid enforcement, and lead to prolonged litigation.
- Impact on international schools: Internationally branded or premium schools may face higher compliance costs and disclosure requirements, potentially affecting their autonomy and brand positioning under tighter Government oversight.
- Procedural ambiguities: It remains uncertain whether, analogous to the SLFRC's veto power for parents, the DFAC and the Revision Committee are also required to secure unanimous approval. Further, while the DoE can take suo moto cognisance of violations under the Act, the absence of an explicit statutory mechanism for parents to report such breaches highlights the need for framing appropriate rules
- No rollback of recent hikes: The Act does not mandate the reversal of fee hikes already implemented from April 1, 2025, leaving parents to bear recent arbitrary increases. This gap has triggered protests and discontent.
Against this backdrop of enhanced fee regulation, the Act also opens avenues for schools to innovate, diversify offerings, and explore new revenue streams within a transparent and predictable framework:
- Premium and differentiated offerings: With fee increases limited and scrutinised, schools are incentivised to adopt premium tuition-based modules – such as international curricula (IB/IGCSE), specialised STEM, arts, or language immersion tracks – whose incremental fee can be more transparently justified and approved if they demonstrate value beyond standard schooling.
- Bundled ancillary services: Schools may introduce optional, separately priced services – transport, meals, after-school clubs, sports facilities, summer camps, or exam prep – which can enhance revenue without violating core fee caps, provided each component's pricing and value is transparent
- Brand-driven and franchise expansion: The demand for regulatory-compliant, quality-assured schooling supports both expansion of branded school chains and the franchise/licensing model – leveraging recognition, parent trust, and operational support to scale across Delhi and tier-2/3 cities, reducing investment risk.
- International collaborations: Predictable fee governance makes it easier for schools to partner with foreign institutions, brands, or EdTech providers, introducing global diploma programs, exchange programs, and joint-certification – appealing to investors focused on premium and expatriate markets.
- EdTech and parent engagement solutions: The Act drives demand for digital platforms enabling transparent fee management and regulatory compliance, and parent participation through surveys, voting, and feedback tools – creating new opportunities in the K–12 ecosystem.
In the absence of centralised fee regulations and with States following fragmented policies and weak enforcement, private schools across India have been able to impose widespread and arbitrary fee hikes, causing financial strain for families. Delhi has been a focal point, where annual increases often ranged between 8–20% and in some cases touched 50%.
The Delhi Government's initiative marks one of the most ambitious attempts at fee regulation in India's K–12 sector. While the Gujarat experience under the Self-Financed Schools (Regulation of Fees) Act, 2017, shows how rigid caps and committee approvals can trigger litigation and discourage foreign investment, Delhi's law introduces a more structured model. By embedding timelines, codified appellate mechanisms involving stakeholders, experts, and bureaucrats, and enforceable penalties, the Act provides greater predictability in fee regulation – an essential element for schools and investors building long-term financial models.
Above being said, schools and investors will need to recalibrate strategies previously dependent on fee-led growth or consolidation. The ultimate success of the Act will hinge on whether it achieves a sustainable balance – protecting parents from arbitrary hikes while preserving autonomy, innovation, and investment appetite. For foreign players and private operators, Delhi now presents both risk and opportunity: a more transparent framework for fee governance, but one that demands careful compliance planning and agility in adapting business models.
Looking ahead, Delhi could serve as a testbed for a more harmonised national framework, provided it avoids the pitfalls seen in Gujarat. If implemented effectively, the Act may not only restore confidence among parents but also offer investors a stable regulatory environment in one of the world's largest school education markets, creating a blueprint for other States to follow.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
