Fees Management

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Tough times is the mantra, Michael Swan advises on how to manage school fees collection

Writing this article in the midst of an apparent financial meltdown, a deteriorating credit crisis and part-nationalisation of some of the UK’s biggest banks, it is difficult to retain any semblance of composure and equanimity. The unprecedented events over the autumn of 2008 that littered the world with financial detritus have shocked governments, businesses and individuals, who will no doubt be the most affected over the coming years as a result of these earth-shaking financial disruptions. All we do know is that the world is going to be a very different place when the problems have been unravelled.

Pressure on parents and independent schools
As a recession in the UK looms, it will put severe financial pressure on many middle class parents and schools. It’s not surprising with a fatal combination of rising unemployment, falling property prices and restricted credit allied to school fees that on average increased by 6 per cent last year and by 40 per cent over the past five years. Unfortunately, these fee increases along with sharp rises in the cost of living are going to overstretch parents – with predictable consequences. Some schools, particularly smaller ones, will also be affected and will be forced into considering alternative strategies to ensure both their independence and future survival.

The changing parental profile
The proportion of middle class, fee-paying families made up of two income-earners has increased markedly over the last two decades, which implies that although families may be feeling asset poor, they are generally better off while household bills are shared.

Also, despite huge amounts of government funding funnelled into the state sector over the last ten years and the rise in the number of academies, pupil numbers attending independent schools have continued to increase; the inference being that parents of all types and economic circumstances are prepared to make financial sacrifices to ensure that their child can benefit from the advantages of an independent education. In an increasingly competitive, globalised and insecure world, the many attributes that independent school pupils gain will be much in demand.

This would suggest that more parents, particularly those who have only relatively recently begun to pay school fees, both expect and welcome a choice from schools on how they can pay their termly fees. Parents are now much more used to paying for big-ticket items in instalments by direct debit (and the total cost of an independent education is only surpassed in size by the purchase of a house) and, no doubt, demand for this facility will become even greater in coming months.

The burden of school fee payment
As well as the payment of school fees being one of parents’ largest financial responsibilities, it is also one of the most important. As a result, school fees carry a unique psychological weight; parents are investing in their children, of course. It takes on a huge significance. One can therefore appreciate the turmoil of those parents who are committed to bettering their child’s future success, but are struggling to find the funds to pay school fees on a termly basis.

There is also a stigma attached to the parent who is under pressure or struggling and is in need of help. Status and the perception of being in control are paramount and parents are usually reticent in asking for help before they absolutely have to.

However, the message that schools should be conveying to parents is not of “affordability” but “manageability”. It should be acknowledged that school fees have outstripped the rate of inflation (however the Government calculates it) for the last ten, if not the last twenty, years. In all likelihood this trend will continue into the foreseeable future. Paying school fees will become more onerous and challenging in the future than it has in the past. A school therefore should be sympathetic to parents and must be proactive in finding ways to offer them choices.

The management of school fees
There are a number of companies in the marketplace that administer monthly payment facilities to the fee-paying parents of schools, as well as additional benefits to the school itself.

There are some important benefits for the school. It receives its fees at the beginning of each term in one lump sum, which enables it to accept monthly payments and improve its cashflow. It is a time-effective method of having a third party collecting and chasing fees, which frees up the school to concentrate on other tasks. Also, some suppliers provide a debt-share facility, which means that in the event of a parent’s school fee commitment being unrecoverable, then the outstanding debt will be shared by both parties.

For the parent, the primary benefit is that it enables them to pay school fees out of income rather than having to find capital sums at the beginning of every term. This helps them to even out the payment of fees over the academic year. Allied to this, payment by the parent is by direct debit arrangements; transactions are straightforward and can be adjusted to accommodate new payments for music lessons, school outings etc. Also, the parent is not credit-checked if their child is attending the school.

Michael Swan is managing director of HTC Holmwoods Termtime Collections. Michael can be contacted on 01372 746006 or visit www.htcschoolfees.co.uk

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