Amanda Hall looks at how school bursars can use the latest billing technology to offer more flexible payment options to parents choosing a private education for their children.
As parents and managers of our homes, family finances and more, we have come to expect businesses to help us to perform our roles effectively.
Many organisations from the local councils and utility suppliers, to health clubs and insurance companies, have persuaded us that we will benefit from making any payments due to them, on a regular monthly basis. This method of payment allows us to easily schedule and calculate outgoings with incomings.
As a part of our role as parents, some of us are fortunate enough to be able to elect to educate our children privately. For many, our children are the first generation in our families to be educated privately, and an increasing percentage of parents educating their children in the independent sector, are meeting this expense from earned income, according to Bursars we have spoken to. Private schools are not solely the preserve of the trust fund baby, but are to be accessed by all. After all, our first public schools were called just that to reflect the intent that they would be open to everyone (although historically, lack of social mobility, ironically perpetuated by the poor provision of education, hindered this ideal).
So how do parents being paid monthly cope with receiving possibly their largest household bill, often exceeding the level of their mortgage payments, on a termly basis? If this were an issue dealt with in a new and different way, could the door to a private education be opened to a greater proportion of the population?
Some schools will accept recurring payments, usually monthly by direct debit, to meet the cost of fees. On occasion fees are spread over nine or ten months, sometimes over twelve. However, unless spread over twelve months, payments are not being made with the same regularity with which income is being received, so the path is being smoothed somewhat, but not levelled out completely.
When parents request the option to pay fees on a monthly basis, spreading the cost throughout the year, some schools simply outsource the process using traditional financing companies. But is it really fair to ask parents to pay the interest fees for these services when those same parents are already making many financial sacrifices to provide the best education possible for their children? Indeed, there is an argument that encouraging parents to use a traditional finance company to help spread the cost of fees, and them subsequently being charged interest, contradicts the Charitable Status most independent schools have. Moray Steiner Schools Limited, believe that one of the factors supporting their Charitable Status are their means-tested assistance arrangements
which include bursaries and Deferred Fee Payment Arrangements which are indefinite, informal, interest free loan schemes.
As shown by the number of independent schools which have closed their doors over the last decade, a problem collecting fees each term does exist and it may be safe to assume that it is the families who are new to this world of private education, and not those born as beneficiaries of a trust or to financially supportive grandparents, who are largely responsible for these figures. If these families were more certain of how much fees would total each year, it could make a big difference. One school reported to us that it has a very successful history of billing fees termly with a predicted amount taken each month by direct debit to cover the fixed tuition and boarding fees. They then bill extras termly and a second direct debit is put in place to cover that additional amount, spread over the next three months.
This approach assists parents in budgeting but still the termly extras may come as a shock.
Families in modern day society avoid so-called ‘bill shock’ when making financial decisions and plans by benefiting from the real-time information that technology has put at our fingertips. We can check actual bank, credit card and mortgage balances 24 hours a day and see all transactions and charges listed, at our leisure. We can monitor energy usage in the home at the touch of a button or from our mobile phone, and our cars warn us many miles in advance when a service, which may have already been paid for by way of a slickly sold care plan, will become due.
All this, yet on occasion school fee bills still come as an untimely surprise, requiring almost immediate payment, three times a year. Schools may send notices when extras are added to an account, but when the list includes various music lessons, extra-curricular activities, trips, and items purchased from the school shop, often for more than one child, most parents are guilty of not keeping a tally.
This problem is exacerbated when a keen teenager returns home excited to attend the next trip (essential to a full understanding of the syllabus!), but the cost is due in full before the end of term – not even in line with the usual billing cycle and presenting a further challenge.
If all extras and fees could be split equally over 12 months, or even an academic year of nine or ten months, then many parents would be better placed to consider private education.
Billing-as-a-Service technology is now available to allow schools to easily manage this themselves, benefitting from the convenience of automated recurring payments but without having to pass on the cost of 3rd
party financing agreements. Furthermore, by adding a self-service element to their websites like so many other businesses, parents can see fees accruing, current amounts due or outstanding, and even make online payments at their convenience, and the shocks could be fewer for parents, bursars and governors alike.