Parents look to sweet deals from banks to pay school fees

Beleaguered by an economy in recession which has manifest in the form of pay-cuts and job-losses, parents across Nigeria are seeking access to children’s education products from banks, and other financial products to ease the burden of paying for school fees.

As the new school term opens this week,  many other hard pressed parents have further resorted to selling their assets at discounted prices to fund their children’s fees, where they do not qualify for a bank facility or soft loan from friends and family.

Many schools across Nigeria’s major cities –Lagos, Abuja, Port Harcourt – resumed last week after the  Easter vacation. The resumption means the pressure is now on parents to pay the school fees of their wards.

In order to pay the school fees, some parents are liquidating existing investments and drawing from their savings.

“We have seen increased enquiry for  Short Term Loans, Salary Advance (SALAD) for salaried workers and payment cards that parents can easily access and use to pay the school fees of the wards”, a banking sector source told BusinessDay.Our source further observed that top on the list of most of their customers recent enquiries, are the bank’s facilities and products that could aid parents to pay school fees.

“These products are actually there, some kind of bridge finance that parents can access to pay school fees, pending when they are able to repay. It is like a salary advance and it is dependent on the parents’ income and credit worthiness.”

“Credit worthiness means you need to look at the person’s income, the organisation they work for, you need to look at how sustainable the organisation is and the integrity of the person in question. You see the repayment of such facilities is dependent on the income of the parents,” said a branch manager in one of the banks, who does not want his name mentioned.

“For a parent intent on accessing any of these credit facilities, simply approach the bank to know what they have. It is essentially a salary advance. Banks would basically advance 50 or 60 percent of your salary to you, this is really an overdraft. What the parents must find out is whether the bank would take all 50 percent the following month or spread it out over a period of about 90 days or more” he added.

But while parents are pressured, schools are also under pressure to recoup the mounting backlog of fees owed by defaulting parents, while also contending with rising operational costs.

“School operators are likewise taking a big hit amid this economic downturn. The cost of operations has gone up by over 200 percent and bear in mind that this is mainly recurrent expenditure.”

“We face two particular challenges currently: inability to get some of the materials we need locally, because our suppliers are not able to source them, as well as the shortage of foreign exchange, which is making it difficult for us to import the materials we need. Yet we cannot transfer this cost to parents immediately by raising tuition fees,” said Oyin Egbeyemi, executive administrator at Tender Loving Schools, Ikoyi, Lagos, in a phone interview.

Egbeyemi further said their strategy to deal with this challenge, relates to cutting consumption of materials, adding that, “we use less of paper and find a way of minimising consumption of diesel, while powering our facilities”.

Egbeyemi added, “We are aware that some parents have taken pay cuts at their various places of work and some might have been laid off. For parents who approach us explaining their unique situation, we work out an appropriate payment plan for them and insist on compliance.”

Parents who spoke to BusinessDay explained the challenges they have been going through trying to meet up with paying the school fees of their wards.

Even though many public schools are nominally free or cheaper to attend, many parents have lost confidence in the public school system because of the low quality of facilities available in these schools. This has forced many parents to seek education for their wards in the more expensive private school system.

Most Nigerian lenders, including Zenith Bank, Access Bank, Union Bank, Stanbic IBTC Bank, Diamond Bank and First Bank, now have products targeted at helping parents and guardians pay the school fees of their children in expensive private schools but many parents find it difficult to access these facilities because of the pre-conditions attached to these products. Others banks that have educational products are: GTBank, FCMB, Sterling Bank, UBA, Fidelity Bank, Unity Bank, Wema Bank, Skye Bank, and Heritage Bank.

 

Iheanyi Nwachukwu & Stephen Onyekwelu