Fees Management

The direct approach

Parents often come under scrutiny for failing to pay termly billed tuition fees on time. Some parents, described by one bursar as the “usual suspects”, fail to do so every school term. Yet this is avoidable, argues Norman Crawford

If only 10 per cent of parents pay late, the nuisance factor is irritating. With 20 to 30 per cent of parents paying late fees, this can become a serious problem, especially as scarce resources are tied up for a third of a year in pursuit of them.

Parent demographics are changing. Data from the ISC point to around a half of parents being new to private education. Such parents are certainly new to the notion of paying tuition fees in three lump sums each year. Should one be surprised that these parents find paying termly fees awkward and inconvenient?

Look to the new
Innovation is the key, with bursars now in the vanguard of direct debit design. Well-placed to recognise the financial burden placed upon parents, many work closely with late payers at the start of term and use low-cost direct debit solutions to help make fees more affordable.

The use of these plans is voluntary for parents and costs schools nothing, but low-cost options represent good value for parents and schools alike.

Keep costs low
New solutions are available at minimal cost and are steadily replacing expensive credit-style arrangements, a remnant from the last century. Today’s parents welcome low-cost direct debit as an aid to regulating the household budget, especially where tuition fee costs often exceed mortgage payments.

For a moment, put oneself in the shoes of parents meeting annual costs of £12,000. Setting aside £1,000 per month is much easier to afford. For school bursars, direct debit assures payment on the opening day of term and, when allied to tight credit control, default is statistically insignificant with a low-cost direct debit variant.

Older-style credit-based arrangements continue to charge parents up to 3 per cent extra. Dramatic savings are possible with a new plan variant that costs 0 per cent, while switching plans can be accomplished online with ease.

As word of low-cost alternative plans spread within the parent population, bursars striving to offer parents best value in a competitive marketplace now have access to new and highly appealing low-cost direct debit products, especially with rising tuition fees.

Easy work
Direct debit administration for school bursars is far less onerous, with most parents applying online from the comfort of their home through the school’s website. Innovative, low-cost products available around the clock represent a valuable tool for schools, supported with the back-up of a telephone helpline during office hours.

A wholly different but proactive approach is where a school chooses to make the collection of all fees by monthly direct debit to the school’s bank account mandatory. This service confers many benefits for schools and its parents.

Parents rarely object to paying by monthly direct debit when offered at no cost. Today’s parents pay virtually all regular expenditure by direct debit, so offering to collect tuition fees automatically is in keeping with their expectations.

A certain future
For schools, collecting monthly delivers two powerful benefits. Certainty of collection via BACS is assured when parents begin making payments in July through to June the following year. Parents also demonstrate a clear commitment and ability to pay several weeks before the start of each term, while investment is improved through a superior cashflow stream.

Net present value is enhanced by collecting monthly, compared to the traditional payment by cheque, dispelling the myth that termly is best. Hamilton College, a day school, collects nearly 50 per cent of its fees by monthly direct debit, with no default. Each year’s intake of new parents automatically joins the scheme: an enviable outcome.

Sustainable, tailor-made direct debit solutions that suit the school’s culture are available online, whether by voluntary take-up by parents or the mandatory use of direct debit by the school.

Norman Crawford is managing director of The Fees Co. He can be contacted on 0131 4498840.

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