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The cost of private education

By Staff Writer
You may not feel sorry for those wealthy enough to afford private education for their children. But it's hard not to spare a thought for them when you realise that they too are being squeezed and ripped off.
 
While their lifestyle cannot be compared to how the poor live in South Africa, things are getting tougher for the rich as they are increasingly having to consider lifestyle trade-offs in order to send their children to a private schools.
 
"Previously, education was not a major factor in the budgeting of the wealthy, who often could afford to manage the expense out of their monthly income," says Jason Bernic, financial planning coach at Old Mutual Wealth.
 
"However in recent years – kicking off a trend we expect to continue for decades to come – even the wealthy have been feeling the pinch of rising private school costs."
 
Bernic notes that although individuals with an income of above R80 000 a month are considered to be in the top income bracket, it would appear that education costs continue to rise ahead of inflation and their monthly salaries.
 
The reality is that it will continue to impact significantly on their disposable income.
 
"Increasingly, parents need to forego this year's holiday away to pay a hefty registration fee, or hold off on upgrading cars to the latest model to enrol another child," Bernic says.
 
An article by Business Tech hit this point home when it published the 2015 annual boarding and day fees for the most prestigious schools in South Africa in October last year (see below).
 
It shows that most fees per year are well over R100,000 a year – something that not everyone has at hand, particularly if they have more than one child.
 
Boarding and day fees 
 
School Annual Fee (Boarding) Annual Fee (Day) Entry Fee
Hilton College R209,000 N/A R52,250
MichaelHouse R192,000 N/A R24,000
St Martins R184,460 R71,460 R12,000
St Andrews R182,700 R81,600 R15,225
Kearsney College R181,350 R124,800 R17,400
Roedean School for Girls R181,140 R99,234 -
St Alban's College R181,000* R102,900 R55,000
St Johns R178,523 R105,760 R61,348**
St Andrews School for Girls R174,860 R94,380 -
St Mary's School for Girls R173,700* R92,450 R34,950**
Bishops R168,140 R96,360 R20,000
Somerset College R167,736* R89,904 R22,000
St Stithians R166,691 R96,119 R10,000
St Mary's DSG R166,155* R90,630 -
Kingswood College R158,355 R82,920 R10,700
Diocesan School for Girls R157,590 R82,320 R35,200
Herschel Girls' School R157,560* R78,960 R10,000
The Wykeham Collegiate R154,820* R83,500 R4,000
Bridge House R149,490* R81,680 R3,500
St Cyprians R148,560 R76,560 R7,500
St Anne's School for Girls R146,200 R80,000 R34,000
Treverton College R142,400 R69,600 R5,000
 
* 2015 fees ** Refundable deposit

Source: Business Tech
 
Bernic adds that although in many instances, private schools offer discounts for annual fees paid upfront, these amounts are often so steep that even the wealthy elect to rather make monthly payments.
 
And, according to one fellow journalist that I know of, even paying monthly is being frowned upon by some private schools.
 
Apparently, if she were to skip a payment or pay late the school said it would insist that she pay her fees on a termly basis. Needless to say this school is watching her repayments like a hawk.
 
"Unfortunately, the reality is that affording a private school education is going to become harder, not easier in future. And with the phenomenon of parents having to pay maintenance and school fees for more than one family where divorce has become a factor, many HNWIs are facing a real dilemma," says Bernic.
 
Is it the only option?
 
"For a significant segment of the wealthy, private schooling is the only option they will consider for their children, but it is important that even they start making sufficient provision in order to be able to afford this expense in the future.
 
"Currently, the cost of a private high school education can set parents back about R1 million in fees over five years, nipping at even affluent purses. But this figure will have dramatically increased by the time today's toddlers start studying for their matric exams," says Bernic. 

What's to be done?
 
Bernic advises parents whose children are set to receive their education between 2020 and 2035 to have an investment strategy specifically for education, regardless of other investments, in the face of soaring education costs.
 
But saving at the point of admission to the school is the wrong approach.
 
"Parents need to start their education savings as early as possible, giving the money time to grow and accumulate," advises Bernic.
 
"An integrated wealth management plan can assist in determining if and where trade-offs are required to realise a certain lifestyle and life's goals. While the realisation that a serious rethink of strategy is in order where people are not investing enough might not be a pleasant one, parents will at least finally be in a position of empowerment - knowing what action is needed, and how the situation can be rectified."
 
In conclusion
 
Yes, saving early and making sacrifices is the right approach in being able to afford private education in South Africa.
 
But, in my mind the fees in some cases are soaring way above inflation and it is ridiculous that they are becoming so unaffordable that even the wealthy appear to be struggling. Someone (whether parent or state) should draw the line somewhere.
 
The schools argue that they receive little or no support from government, but beyond that I don't see how else they can justify their high fees. There are lots of examples of schools out there, good schools, that are doing more with less.
 
The counter-argument to that would of course be that if I don't like it that I am free to send my child elsewhere.
 
But if I want the best (and I am sure most of them would claim that they provide this) then I would surely have no choice but to fork out the money. 

So while you may laugh and shrug about the wealthy having to trade down from a Porsche Panamera to a three year old Hyundai iX35 to afford little Jonny's private education, just think about or ask yourself this:
 
Isn't it time that parents protest about the cost of education, even if it is for a private school? Why should we pay so much for 'the best'?
 
Why do we need to pay down a deposit that is so large that some have to save for at least a year if not more to be able to afford it? 

Why are some school deposits non-refundable? Surely if our kids don't get in we should have the right, under the Consumer Protection Act, to get it back? Where is the money being spent? Is it being used in the right way?
 
Does the school really need that fifth tennis court?

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