This article was originally published in WealthBriefing and can be accessed here.
Private schooling during the Coronavirus lockdown: fees, contracts and managing expectations
Following the start of summer term, the full impact of the Coronavirus lockdown and closure of school doors is being felt by students, parents, school leaders, staff and the wider community. Students will have spent the last week adjusting to a return to school which is unlike any other. Parents will be struggling to impose routines on their children and supervising their online learning while, in many cases, working from home themselves. Teachers and administrators, many of whom will have spent Easter break completely transforming their operations to embrace remote technology will be facing the difficult task of implementing an online curriculum and educating, engaging and supporting students remotely.
While moving exclusively online until the lockdown is lifted will be a major challenge for all schools, private schools will be feeling the added pressure of justifying the fees they will continue to charge to parents in this uncertain time.
Fee-paying schools vary considerably in the approach they are taking to offering discounts on term fees or other concessions to parents and how they are handling situations where parents whose incomes have been affected by Coronavirus are unable to continue paying full fees. Schools will be thinking about how to entice students back next term and discourage parents from withdrawing their children despite there being no guarantee of a return to normalcy by the autumn. Recruiting new students will be more challenging given travel restrictions and social distancing and, for some schools, a sizeable income may be lost from overseas students who are unable to return due to lockdowns and health fears in different countries.
In cases where parents are refusing to pay fees for the summer term which has already begun, schools will rely on their terms and conditions which usually provide that withholding of fees will lead to suspension and eventual expulsion of pupils from school. Their terms may inter alia also entitle the school to withhold information or property in the event that fees are not paid. Schools will generally require parents to give a full term’s notice before withdrawing their children, or payment in lieu of a full term’s notice will be charged in the event that parents decide now or later in the term that they will withdraw their children at the year end.
Terms and conditions which serve well in normal times may not be entirely fit for purpose in the present unprecedented circumstances and, while some schools will have with foresight or quick thinking managed to slip in provisions and policies for disruptions caused by global pandemics, many will be behind the curve.
The parent contract may have a force majeure clause that applies broadly to events outside the school’s control and excuses the parties from performing their obligations for a period of time but whether it works in relation to the Coronavirus crisis will depend on how the provision is drafted. In any case, such a clause may act as a double-edged sword. Unless the terms are carefully worded to carve out payment of fees, the effect of such a clause may enable schools to suspend or vary the provision of services but it may also enable parents to stop paying fees if normal school does not resume within a specified period of time. Relying on terms and conditions will likely lead to an argument about what services are being provided by the school and whether they meet a sufficient standard to command payment of full fees.
Regardless of what the contract says, and even if it expressly refers to the requirement to continue paying full fees during any interruptions caused by epidemics or pandemics, schools will face situations where parents are unable or unwilling to meet their fee-paying obligations and it will not be practical, cost-effective or beneficial for the school’s reputation to pursue them for breach of contract.
Inevitably, schools will need to reach further than parents’ pockets to brace themselves during this difficult period. They should take advantage of the government support measures in place, including furloughing any staff that are not responsible for online teaching or accessing the Coronavirus Business Interruption Loan Scheme. Schools may consider taking other temporary measures such as reducing salaries for their highest paid staff and negotiating rent holidays in relation to leased premises. Any savings can then be passed on to parents through discounts in next term’s fees or refunds at the end of this term.
Schools are best advised to communicate openly with the parent body about what discounts they can offer and what steps they have taken to minimise costs. Schools vary considerably in their financial means and some schools will be better placed than others to offer higher fee reductions, extend their payment terms or offer financial aid to those families most affected by the economic impact of Coronavirus. Parents may be able to argue that they are entitled to a discount as the provision of online learning is not comparable to the full educational service for which they signed up their children. Certainly it would be difficult to justify charging parents for transport, meals or room and board, if applicable, school trips and any extracurricular activities that cannot be replaced by online learning.
On the other hand, the majority of parents are invested in supporting their children’s school and ensuring its long-term survival and are more likely to accept that fees need to continue to be paid in order to retain the teaching staff and meet overheads. Maintaining an open dialogue in this respect is key to keeping parents onside. Ultimately, taking a hard-line approach to dealing with parents’ concerns over the provision of education or affordability is likely to lead to students being withdrawn, threatening the future of the school.