Three (3) strategies for dealing with unpaid school fees

Unpaid school fees can negatively affect a school’s financial position. Here are our top tips to navigate it with parents.

Three (3) strategies for dealing with unpaid school fees

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

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

Our firm has had 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 minimizethe loss of a school both financially and in the delivery of stable education to students.

 

Strategy 1 – Address Defaults Early with Parents

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

What is the cause of the unpaid school fees?

A default in tuition fees may arise out of difficult family circumstances, including:

    • Unexpected redundancy
    • Family law proceedings
    • Increased medical expenses to address a serious illness.

These circumstances usually have an effect on a student’s education and are often beyond the control of parents and guardians.

 

What are the benefits of early intervention in school fees?

Acting on an early default and maintaining open and frank discussions between the school and the parent allows for alternative suitable agreements to be put in 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 agreement for alternative suitable arrangements such when school fees are deferred and paid out of a family property settlement.

Engaging early with parents may not just prevent unpaid school fees from “spiralling out of control”, but it allows a school to preempt any future legal issues that may arise out of the family’s changing circumstances (e.g. it is common for schools to get caught in the middle of family law proceedings).

In our experience, neglected defaults are the ones at risk of “spiraling 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.

 

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 a number of added benefits over retaining a debt collector.

 

Why engage a lawyer over a debt collector?

Receiving a Letter of Demand from a lawyer on their letterhead is usually a firm reminder to the debtor of the seriousness of an unpaid debt. Such a letter will usually remind the debtor that an unpaid school fees/debt gives rights to the school to commence legal proceedings.

 

What options are available after a Letter of Demand?

In the event the Letter of Demand is ignored, a lawyer is able to 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 procedure is followed and works towards preserving the reputation of the school.

Due to the nature of legal work, a Lawyer will be able to advise on associated legal risks and or are able to carry the matter to preparing enforceable agreements through a court process, if alternative payment terms are agreed upon with the parent.

 

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

 

Need a Streamlined Debt Recovery Process?

Through our significant experience and understanding of the schools and education sector, we have developed a streamlined debt recovery process specifically tailored to your priorities.

Our process is inexpensive and affordable. We are able to offer ethical and cost-effective debt recovery solutions that take into consideration your interests, of which other debt collectors may be unaware.

This includes a fixed-fee recovery option and discounts for pursuing multiple debts.

Please call us on on (07) 3252 0011 and ask to speak to a member of our schools and education team today.

Helpful Links

https://corneyandlind.com.au/education-law/childrens-rights/

https://corneyandlind.com.au/education-law/could-a-school-be-liable-in-negligence-for-a-students-poor-performance/

https://corneyandlind.com.au/education-law/informed-consent/