Many schools in Bengaluru partner with third-party finance companies to collect fees

Many schools in Bengaluru partner with third-party finance companies to collect fees

M Shakeel, who is the president of Voice of Parents–a collective for aggrieved parents, said the current situation of schools roping in NBFCs as an intermediary to collect the fees could force parents into debt. “While it’s true that most schools don’t earn any interest on the money, the parents have to submit post-dated cheques to the NBFCs,” he said. He further mentioned the development at the High Court and the state government’s inability to enforce a fee cap of 70% of the school fee. “The schools are not following the HC directive to address the grievance of the parents and the court is still hearing the matter. If it eventually decides that the 70% fee rule is valid, under the current arrangement it will be very hard for us parents to get back the money if we’ve already paid the full fee” he added.  The third-party problem He alleged that when parents speak about their difficulty in paying the fee to the school management, they are told to submit their income tax returns and bank statements to prove their financial inability. “But the schools themselves do not furnish their accounts to the government,” Shakeel added.

The Karnataka government had issued a circular in January 2021 asking schools to only collect up to 70% of the set fees, under the Karnataka Education Act. And also to give parents and guardians the option to pay the fees on a monthly basis, if needed. Legal quagmire

However, this cannot be enforced by the government due to pre-existing litigation. In 2019, school management (a collective of ICSE and CBSE schools) had gone to the High Court (HC) challenging their inclusion under the ambit of the Karnataka Education Act. As part of the case, the state government told the HC that it will not take any coercive action against the schools. A similar step taken by the Rajasthan government in regulating private school fees in the state has been stayed by the Supreme Court in 2021. Schools have said that if there is a failure in the timely payment of fees by parents or guardians, it could result in cancellation of their child’s enrollment in the particular educational institution. They have also said the fees are needed to pay their teachers, rent, etc.  And, starting this academic year, many schools have roped in non-banking financial corporations (NBFCs) as an intermediary to collect the fees. This has added to the troubles of parents and guardians who are financially struggling

“We are also not told the criteria for availing this zero-interest and I feel it is just arbitrary. If a parent doesn’t pay enough attention and is just focussed on paying their kid’s school fee and securing their seat, this interest could be added (without them realising) and later they will be hounded for repayment. And the only option given is paying the entire school fee and not 70%. In this way, the school tricks parents into paying the entire school fee (before the matter has been settled in court),” he added.  In this context, the AAP has written to state Education Minister S Suresh Kumar to take time-bound steps to alleviate the problems faced by concerned students and parents. Prithvi Reddy, the state convenor of the party, has said that all stakeholders including small private schools will benefit if the government can support the teachers with salaries which in turn can result in fee waivers. “A large part of parents’ frustration stems from the fact that there seems to be no forum for grievance redressal and the only option they have is to pay fees or risk getting their child’s name removed from the school,” he said.   Another parent mentioned that Vibgyor School promotes a finance company called Gray Quest on their website, which will pay the entire school fee for a child after collecting all the financial details of the parent or guardian. “On the school website, they advertise a finance company called Gray Quest saying it is a zero-interest EMI scheme that the parents can avail if they are in financial distress. But, once we go to the Gray Quest website and start uploading the details, it says that we are not eligible for the zero-interest,” said Praveen (name changed), whose child studies in the school. This means that if he makes use of the finance company to pay his child’s school fee, the entire terms charge has to be paid including an additional interest.

“For parents who have said that they will be unable to pay because of financial constraints, the school has a tie up with a loan company called Financepeer and they will directly pay the school if we take the loan from them. There is a zero-interest EMI till six months and after that, there are several slabs with increasing interest rates. For nine months, the interest is 2% and for 11 months it is 3.5%,” she added.  The issue is not limited to a select few schools but seen in many institutions across the city. One parent told TNM that they were asked to pay 80% of the fees the previous year, and this year they have not even been formally informed about the revision in fees. “Instead, they (school management) told the parents that the fee will be confirmed after the government decides if offline classes can be conducted. But we’ve already been asked to pay Rs 48,000 as the first installment for my child who is in class 4,” said Vasanta, whose child studies in Narayana Techno School in Nandini Layout. 

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