Coronavirus and private schools | Any chance of a payment holiday?

The extension of the countrywide lockdown to the end of April because of the coronavirus pandemic will only serve to add more pressure to a South African economy that has been creaking over for most of the past decade. At the centre of its struggles has been the record low confidence levels of consumers, whose spend is the largest contributor to an economy already in the grip of a recession.

Some of the large banks, such as Standard Bank, have already announced measures to alleviate pressure on clients in good standing as incomes get squeezed. And questions are being asked whether education companies, such as Curro Holdings for instance – the country’s largest private school business with more than 120 schools – will face pressures to lighten the load.

The sudden and unforeseen financial implications of the pandemic, as well as the fact that all schools have been closed for weeks, raise questions about whether private schools will offer payment holidays or other special arrangements.

“While schools remain closed during the Covid-19 pandemic, we are equipped for learning to continue via a remote and online learning strategy. Further, the time that learners have lost not being able to attend school, will be made up throughout the remainder of the year,” Mari Lategan, Curro spokesperson, said.

The Stellenbosch company, which has had a rapid rise since its establishment in 1998, is committed to providing all of their learners with a full year’s schooling and, as such, all stipulations in terms of the enrolment agreement between parents will remain in place, she added.

Since Curro’s stock peaked in December 2015, its shares have plunged some 81{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2}, reflecting the pressure on the economy since the unceremonious axing of former finance minister Nhlanhla Nene by former president Jacob Zuma that month.

The economy has buckled under the pressure of low confidence from investors, consumers and business as a result of stories of governance failures across state-owned institutions such as Eskom, which has fed into an energy crisis and lacklustre demand.

With an unemployment rate above 29{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2}, a consumption-led economy remained under pressure. In the higher skills category, employment has become increasingly insecure as Africa’s most industrialised nation sees the growing effect of technology disrupting  virtually all its major corporations.

Private school group, ADvTECH, has appreciation and sympathy for the position facing some parents, says Nwabisa Piki, spokesperson for the owner of Crawford Schools. She said the group was considering how these parents can be accommodated within the context of ensuring operational sustainability. 

“We are not anticipating losing any teaching days due to our restructured calendar and will resume contact classes as soon as we can,” she said, adding that boarding fees will not be charged while pupils are not in residence.

Further reflecting pressures on private schools, ADvTECH, which was founded in 1993, has seen its shares fall 54{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} from their April 2017 peak.

Payment Holidays? 

One of the country’s oldest private schools which isn’t owned by a listed entity, the Cape Town-based boys school Bishops, said it was too early to say whether there will be a need to consider any variances to the school fees policy.

This will depend on when it would be possible to get back to school, Guy Pearson, principal of Bishops, which was founded in 1849, said.

He does not anticipate losing any “school time” even though the lockdown has been extended, due to the June holidays then likely being cut short to make up for lost “contact education”.

Pete Storrar, director of marketing at the 148-year old Hilton College in the KwaZulu-Natal Midlands, says they have had very few requests for payment holidays.

“We do not want to underestimate the devastating effects that the Covid-19 pandemic must be having on the economy. We are working on creative solutions to the challenges that many Hilton families are facing.”

Murray Witherspoon, director of marketing at Michaelhouse, also in the Midlands and which was founded in 1896, says they too recognise the huge impact the coronavirus crisis has already had “…and will almost definitely continue to exert on all parents’ abilities to meet a number of financial demands”.

“As our parents are aware, Michaelhouse is a fee paying, not-for-profit school, and as such a consistent and reliable income remains important … That said, we have embarked on a number of savings, the impact of which we will only be able to assess later in the year, along with other direct savings such as in food and utilities,” he said.

“In time, once our overall situation in terms of how the year will play out becomes clearer, we will be able to be more specific and detailed in meeting the challenges facing both our parents and Michaelhouse.”

Heather Goedeke, head of Herschel Girls’ School in Cape Town, founded in 1922, said they had not had parents asking for payment holidays.

“We have communicated detailed curriculum and teaching plans to all parents and we have created platforms for ongoing communication. We are acutely aware of the need to balance the financial well-being of our staff members and our parent body,” she says.

“Any decision to change the current financial arrangements will be made in due course, if necessary…and we will, having regard to the prevailing circumstances, at any given time strive to attain and maintain sustainable solutions.”

As a consequence of the regulations announced on 18 March 2020 in terms of the Disaster Management Act, private schools are legally prohibited from rendering the service they have contracted to provide to the extent that the school term overlaps with the lockdown period, according to Pierre Burger, a director at Werksmans Attorneys.

“The result is that the counter-party to the contract – usually a learner’s parents – is entitled to a remission of the fee for the duration of the supervening impossibility. The amount of the remission will depend on considerations of fairness and what value the pupil continues to derive from the school’s services during the period of supervening impossibility.”

For example, if a school provides classes by video conference, or makes electronic materials available to the pupils during the lockdown period, this might have the effect of decreasing the entitlement to a reduction of fees.

Futurist Dr Morne Mostert, director of the Institute for Futures Research at the University of Stellenbosch, predicts that the lockdown and resultant isolation could be creating a new digital elite due to their unlimited internet access and hence continued access to good educational instruction for their children.  

“There can be no doubt that the pandemic has exacerbated the inequality that exists in education in this country and we need to continue to seek ways in which we can continue to assist pupils from less well-resourced schools and, in particular, the girls of the Roedean Academy,” a letter sent to parents from the Johannesburg-based girls school states.

Fiona Rogers, executive head of the school founded in 1903, said, as a private not for profit educational institution, the school has a contract with each parent and, as such, it does not comment on the financial affairs of individual requests or arrangements with parents.

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