From the Saigon Star School case: Stay alert to avoid paying the price

This is not the first time the press has spoken out about long-term tuition packages at international schools, but many parents have still "tasted the bitter fruit", the latest being the case at Saigon Star School...

Saigon Star International School campus in Thanh My Loi ward (Thu Duc city, Ho Chi Minh city) will be forced to execute the judgment on December 26 - Photo: TRONG NHAN

Speaking with Tuoi Tre, education expert Nguyen Thi Thu Huyen - former principal of a large international school in Ho Chi Minh City - analyzed the story of tuition packages from both the "seller" and "buyer" perspectives.

There should be an inter-sectoral mechanism, combining education, auditing, tax agencies... to require schools to report their financial activities. When there are signs of abnormalities, warnings should be issued promptly to inform parents.

Dr. of Education Nguyen Thi Thu Huyen

Cash flow disruption

* Why are tuition package models still so attractive to many parents, madam?

- An important reason is because it is much cheaper than paying each year. For example, in the case at Saigon Star School this time, if parents pay a tuition package for all 5 years of study in advance, the school will first calculate the tuition at this year's tuition rate. At international schools, tuition increases almost every year. Being able to pay tuition for the next 3, 4 or 5 years at this year's tuition rate, avoiding annual tuition increases, is beneficial. Not to mention the school also applies great incentives. At Saigon Star, many parents get up to 50% off tuition when paying in advance in multi-year packages.

Some other schools in Ho Chi Minh City also have the option of a refundable tuition package, for example, paying 2-3 billion in advance, the child will study for free, when the child finishes studying, the parents will receive back all or part of the money paid. Some schools even allow parents to buy and sell these tuition packages to each other.

* Is the risk of this form that the school owner can collect money and disappear?

- It is a risk, but not a big one. What is more worrying is the management of the school's cash flow. The deeply preferential tuition packages are often for the school to quickly have capital, commonly used to invest in facilities. However, the school's operating costs are very large and sometimes not carefully calculated, leading to a situation where it is easy to lose balance if there is an incident.

COVID-19 is an example. Many private schools with tuition fee collection programs have encountered cash flow difficulties. Because at that time, the school could not collect more money from parents but operating costs did not decrease, still had to pay for rent, electricity, water, teachers' salaries...

Second, some schools do not maintain a balance between students paying tuition in installments and students paying annual tuition. Newly established schools often have difficulty filling their classes. For example, a class that can teach 25 students but only enrolls 17-18 students may launch tuition packages to fill the class. There are also cases where the school's shareholders sell their tuition packages to parents separately...

This can lead to a surge in the number of students paying tuition in packages. When there is a sudden need for cash, parents will rush to withdraw it, and the school will not be able to handle it.

Beware of "huge" discount packages

* The Ho Chi Minh City Department of Education and Training has repeatedly stated that private schools must collect tuition fees according to regulations and cannot collect them long-term. However, many schools seem to "ignore" this. What do you think is the reason?

- In fact, I think it is very difficult for the Department of Education and Training to manage because it may be outside the scope of the education sector. That is because there are many ways for schools and parents to reach a private agreement. The party that signs with parents is usually not the school, but the company representing the school or a third-party company.

Even the school owner is the one who deals with these tuition packages on his own behalf. In principle, it is a civil agreement between the parties, so it will be difficult for the education sector to manage. Moreover, each private school is essentially a business, so first of all, they will prioritize how they can... "survive".

* So how careful should we be with these tuition packages, madam?

- Actually, there are some schools that do well and properly with tuition packages. The first school to have a tuition package program in Ho Chi Minh City was more than 10 years ago, and now they have passed the first phase of refunding money (according to the refund package) to parents, and everything is still going well. If everything goes well, it is a "win-win" form, students can study at a low price, and the school has investment capital in the initial stage.

The problem is that these tuition packages must be well managed, balanced with operating costs. For example, the cost of teachers and staff alone that some international schools spend often accounts for 40% of a student's tuition. That does not include other costs such as premises, facilities, equipment... So if a 50% tuition discount package is launched, it means the school will have to suffer a loss. A discount of about 25% is the most reasonable.

Next, school leaders need to commit to using the money collected from tuition packages to reinvest in school operations. This money cannot be used for other business purposes, because it would be very risky if that business encountered difficulties or failed.

In particular, in cases where short-term capital is needed, schools should prioritize selling short-term tuition packages, such as tuition packages that only last 2-3 years, instead of selling packages that last up to 12 years. Because in general, the larger the tuition package and the longer the period, the greater the possibility of loss and risk.

To prevent more cases like Saigon Star

Parents should not be too greedy for bargains from tuition packages, especially those with "huge" discounts. Remember that every year, most private and international schools have to increase tuition by 7-8% to compensate for increased teacher salaries, rent, etc. Yet parents not only receive the same tuition, but also a 50% discount?

Source: https://tuoitre.vn/tu-vu-truong-saigon-star-tinh-tao-de-khong-phai-tra-gia-20241218102538497.htm