What impact do unpaid school fees have on students and schools? 

Parents can decide to send their children to private schools or colleges for a variety of reasons. These reasons could be related to trust in the quality of private education, or the religious education provided by the school. 

Unfortunately, the ability for a family to meet school fee payments can deteriorate very rapidly or a variety of reasons. This can negatively affect the student’s education as well as the school/college’s financial position, particularly where budgets have already been set. 

Fortunately, our firm has lengthy experience in advising on debt recovery matters for the school and education sector. Our breadth of experience informs this article, which aims to assist schools in implementing strategies to minimize a school’s loss, both financially and in the delivery of stable education to students. 

Strategy 1 – Address Defaults Early with Parents 

At the start of a student’s enrolment, parents are always able to meet private school tuition fees. However, a family’s circumstances can change very rapidly, and may not occur with any malicious intent of the parent. 

Some reasons that a default in tuition fees may be due to difficult family circumstances, including an unexpected redundancy, family law proceedings, or increased medical expenses to address a serious illness. These circumstances usually also have an effect on a student’s education. 

What are the benefits of early intervention in school fees? 

If a default in tuition fees is picked up early, the school and the parents should maintain open and frank conversations, so that an alternative and suitable agreement can be put into place. These discussions and ensuing documents do not prejudice the strict legal rights of the school or college if they are conducted on a “without prejudice” basis. 

For example, if a parent is in default due to increased legal spend as family law proceedings are afoot, it may be possible to reach an agreement for alternative suitable arrangements (e.g. school fees are deferred and paid out of a family property settlement). 

When parents are engaged in early discussions, this may prevent unpaid school fees from ‘spiralling out of control’. Schools will also be able to pre-empt any future legal issues that may arise out of a family’s changing circumstances (e.g. it is common for schools to get unnecessarily caught in the middle of family law proceedings). 

In our experience, neglected defaults are the ones at risk of ‘spiralling out of control’. A parent’s capacity to repay is reduced as additional costs are added to the debt, or other debtors commence recovery action against the parent/s. 

Strategy 2 – Involve a Lawyer 

Unpaid school fees relate to the recovery of a debt, which can attract the services of a debt collector. However, we suggest that retaining a lawyer has several added benefits over retaining a debt collector. 

Why engage a lawyer over a debt collector? 

A debtor is prompted to the seriousness of an unpaid debt when they receive a Letter of Demand from a lawyer. Such a letter will usually remind the debtor that an unpaid debt gives the school the right to commence legal proceedings. 

What options are available after a Letter of Demand? 

In the event that the Letter of Demand is ignored, a lawyer can assist the school in escalating legal proceedings in pursuit of the debt. A debt collector will need to engage lawyers to do this. 

Lawyers are also regulated by strict ethical duties (although debt collectors are also highly regulated). This ensures that procedure is followed and works towards preserving the reputation of the school. 

If you were to retain a lawyer, they would have a better understanding of associated legal risks and are able to advise you on preparing enforceable agreements if alternative payment terms are agreed upon with the parent/s. 

Strategy 3 – Review Your Enrolment Contract 

Having a clearly worded and enforceable enrolment contract can be an effective deterrent against potential defaults. 

For a school, it is important to review the enrolment contract from an enforcement perspective. Steps should be taken to ensure that an enrolment contract is able to be relied upon to enforce matters such as (without limitation): 

  • Payment of up-front monies 
  • Termination in the event of un-remedied default 
  • Payable notice in the event of early termination by parent/s 
  • Interest payable on unpaid monies, and 
  • Passing on additional costs of recovery (i.e. legal fees) 

Need a streamlined debt recovery process? 

We have an inexpensive and affordable debt recovery process that is tailored specifically to your priorities. Our firm has significant experience in understanding the schools and education sector, and we are happy to develop this process for you. 

We offer cost-effective legal solutions that take into consideration your interests, of which other debt collectors may be unaware.  

This includes fixed-fee recovery options and discounts for pursuing multiple debts. Please feel free to contact us today on (07) 3252 0011 if you would like to discuss debt recovery options further.