time-ripe-for-regulating-coaching-factories

After Byju’s, it is now FIITJEE’s turn to slip into a major financial crisis. Not long ago, these two leading players in India’s thriving coaching industry appeared unstoppable, riding high on expanding markets, soaring valuations, growing student admissions, and investment flows.

 

However, the edtech industry is now in the middle of a meltdown. The collapse is largely due to financial mismanagement, declining student engagement, exorbitant fee structures, high operational costs, unethical practices, and other extraneous factors.

 

Once seen as a role model for the educational technology sector, Byju’s has been on a downhill path for some time, facing allegations of financial fraud that led to investigations and scrutiny of its financial reporting practices. The cash-strapped company has entered insolvency proceedings after American lenders complained last year about the alleged misuse of $1 billion it had borrowed. This has left thousands of employees and students in the lurch.

 

FIITJEE, a prominent player in the competitive exam coaching space with over 100 centres across the country, is also grappling with multiple crises, including abrupt closures of centres, financial difficulties, and legal challenges. At least eight centres across North India have shut down in recent times after hundreds of its teachers resigned over non-payment of salaries and pay cuts.

 

Time for regulation

 

It is baffling that India’s coaching industry, which provides supplementary guidance for students aspiring to crack competitive exams like JEE, NEET, and UPSC, is still allowed to operate without any meaningful regulation.

 

The test preparation market, valued at Rs 58,000 crore a few years ago, has historically been unregulated, leading to concerns about exorbitant fees, misleading advertisements, and the lack of standardisation in teaching quality and infrastructure.

 

The high-stakes nature of these exams has created an environment where scoring even a fraction higher can make or break a student’s chances. Many students and parents feel that regular school education is insufficient for cracking these exams, fuelling the demand for coaching.

 

In the absence of any policy or regularis0ation, the number of unregulated coaching centres in the country continues to grow. Lack of oversight has led to inconsistencies in quality, exorbitant fees, and unethical practices. Over the past two decades, coaching institutes have mushroomed across the country, promising students an edge in competitive examinations. In reality, many cash in on exploiting students’ fears and insecurities.

 

For an industry of this scale and size, it is surprising that there is no proper regulatory system in place. There are only broad guidelines which were issued by the Central government in January last year, but they are observed more in breach than in practice.

 

Standardise fee structure

 

There is an urgent need for regulation to standardise fee structures based on services offered. This would prevent exploitation and ensure affordability. Coaching institutes must also be mandated to disclose their curriculum, teaching methodologies, and actual success rates so students and parents can make informed choices.

 

Regulatory bodies must conduct periodic assessments of teaching quality, infrastructure, and learning outcomes to ensure that coaching institutes maintain high standards. More importantly, a robust grievance redressal system must be in place to empower students to raise concerns about quality and services without fear of retribution.

 

The industry must also introspect and adopt practices that prioritise sustainability over short-term gains. Parents and students, too, must evaluate their choices critically and push for reforms.

 

Killing fields of Kota

 

Kota, home for India’s most famous coaching factories for admission into the sought-after engineering and medical colleges, presents a stark paradox. On one hand, it produces top rankers and high achiever; on the other, it has earned the grim reputation of being a suicide hub.

 

Every year, thousands of students from across the country flock to this small town in Rajasthan with big dreams and aspirations, but only a fraction succeed. For the rest, rejection becomes hard to handle. In this battle of survival-of-the-smartest, many end up broken, scarred and disillusioned.

 

Kota has seen 15 student suicides this year alone. Despite repeated warnings, the structural stressors, high-stakes exams, toxic competition, unregulated coaching practices, and the burden of ‘guaranteed success’—remain unaddressed. A harsh examination system, parental expectations, personal limitations, and the fear of failure take a heavy toll on young minds.

 

What is more appalling is that the student suicides are reduced to cold statistics and the society is becoming increasingly numb to these tragedies. The Rs 12,000 crore coaching industry of Kota is quite heartless when it comes to students’ welfare.

 

The mismatch between rising aspirations and shrinking opportunities has created a pressure-cooker situation for the youth. This must be treated as a public health crisis demanding urgent attention.

 

In March, the Supreme Court set up a national task force headed by by its former judge Justice S. Ravindra Bhat  to address students’ mental health concerns and prevent suicides in higher educational institutions. More recently, the Central Consumer Protection Authority (CCPA) issued notices to several coaching institutes for misleading advertisements and unfair trade practices. Many ads promise top ranks and assured selections without substantiating their claims, thus laying a trap for vulnerable students.

 

Spectacular decline

 

At its peak in 2022, Byju's boasted over 150 million registered learners globally, operated in 120 countries, and was valued at $22 billion. Launched in 2015, the edtech firm catered to students from kindergarten to class 12, achieving Unicorn status and valuing over USD 1 billion 2019.

 

But its rapid expansion through acquisitions and aggressive marketing proved unsustainable, particularly once the pandemic boom ended. The company faced criticism for using high-pressure sales tactics and misleading advertising to attract customers. It was also accused of creating a high-pressure work environment and carrying out mass layoffs to cut costs.

 

Betrayal, alleges FIITJEE

 

The FIITJEE crisis started earlier this year, when several centres shut down over non-payment of salaries. The FIITJEE management attributed the crisis to financial mismanagement and alleged betrayal by its Centre Managing Partners (CMPs). This meltdown exposed the flaws in its decentralised franchise model.

 

While acknowledging the operational challenges, the management alleged that the crisis was a result of a “criminal conspiracy” orchestrated by individuals with vested interests.

 

The sudden closure of centres in Delhi, NCR, Haryana, and Uttar Pradesh disrupted students’ exam preparation, raising concerns among parents. Many parents who had paid significant fees are now demanding refunds or alternative solutions. Parents are concerned about their children completing the syllabus, accessing study materials, and finding alternative coaching options.

 

Several have filed police complaints over disrupted services and poor communication. Based on these complaints, company founder D.K. Goel and 11 others have been booked by the Noida Police.

 

The crises at Byju’s and FIITJEE are a stark reminder of the broader challenges faced by an unregulated coaching industry in the country. Ultimately, it is students who suffer the most.