Back to school without financial burden
• How Parents Can Manage Fees With Less Stress
As schools resume in parts of the country, no doubt, many parents are wondering how to go about paying their children/wards’ school fees, aside taking care of other necessities.
With the economic situation in the country, some parents are going to need assistance to fulfil this obligation. Some financial institutions and moneylenders are offering some temporary reliefs by financially empowering parents/guardians.
With different names that clearly suggest the intention, these financial houses and moneylenders have come up with different grades of loans, depending on clients’ income, status and lifestyle.
While some, including moneylenders, offer credit from N20, 000 to N1m, some banks promise a minimum of N50, 000 and maximum of N5m within 24 hours without collateral. The only condition is that the applicant must be within the age bracket of 22 and 59, and must also have a verifiable steady income. And aside being in employment, he/she must also have a functional current or savings account with the issuing financial house.
This, however, is the not the case with non-conventional moneylenders, as they expect borrowers to come with guarantors. For some banks, applicants must have at least 30 to 50 per cent of required sum in their accounts to enjoy this facility. A few, including some microfinance houses and such other financial outfits as RenMoney, require that borrowers have functional savings or current accounts with them.
As the amount given differs from bank to bank, so is the minimum and maximum time of payment. For some, the loan must be repaid within three to 12 months, depending on agreed repayment plan.
Since this facility usually comes with three to five per cent monthly interest, some parents consider it truly helpful, while others see it as a bittersweet pill they have to swallow to enable them pay school fees.
Stella, a marketing officer at RenMoney, explained that parents could either receive the loan directly from their office or through schools that are partnership with her organisation. She said the facility was created to discourage parents/guardians from stopping their children/wards’ education, due to inability to pay school fees.
She said: “The cost of funding quality education, both at home and abroad, is daily increasing, and some parents are finding it hard to cope. So, my organisation provides the much-needed financial help to bail out parents struggling to provide their children’s educational needs, such as textbooks and projects, among others.”
The marketing officer disclosed that some clients pay between N30, 000 and N40, 000 per month for one year to offset their loan and get another. And with such soft loans, a borrower could as well solve other family problems and not be weighed down by school fees. She explained that her organisation’s repayment spread is convenient.
“Such money is paid directly into the child’s school account,” she explained. “However, we prefer dealing with schools, as well as requesting for school fees voucher, because we do not want parents to channel the fund to other uses.”
Madam Funke Sanu, a parent, who paid her child’s school fees through school loans some years ago, said the loan arrangement is not as rosy as banks and other marketers are painting.
From personal experience, she explained that there are some hidden charges, which are not always explained to clients at the beginning of transaction, but such hidden clauses are usually unveiled, after the client must have gone half way into the deal or is about concluding it.
She said: “This policy would have been one of the best to help parents at this austere period, but it has been turned upside down, as these financial houses do not always apply the low interest they claim. So, when the hidden charges are added the monthly refund becomes heavier.”
In her view, most financial houses use low interest rates and long-term payments as bait to attract customers. She, therefore, advised parents to look for other alternative means as cooperative societies or even source funds from families and friends.
Similarly, she said parents/guardians could enter into payment agreement plan with schools, as this will enable them pay with ease. Mrs. Stella Bolaji was forced to sell her property, when her family could not meet up with their bank’s demand. Ever since, she has been wary of any offer from banks.
So, in her opinion, loans for school fees should only be undertaken on short-term basis, when such is inevitable. She observed that the school-loan facility is not different from any other bank loans. Indeed, it is the client’s money that is being given out, since he/she is expected to have at least 40 to 50 per cent of the amount being taken in his/her account.
Also, Ajoke Onadeko, a financial analyst, advised parents to plan ahead by operating a school fees-account for their children/wards, especially as one does not need huge sum to operate such account.
She equally urged parents to register children in schools they can conveniently afford. “From my experience, schools with high school fees are not always the best in terms of quality of teachers, standard, facilities and student-teacher relationship, among others. Some parents/guardians register their children/wards in schools with high fees, just because they want to be like the Joneses,” she said.
She, therefore, advised parents/guardians to desist from such idea, as it places financial burden on them, which most times lead to borrowing. “But considering that many Nigerians belong in the low income level, if parents must depend on banks for their children’s education, especially those abroad, the terms must be clearly spelt out,” she said. “Parents should ensure they ask the right questions to avoid one party being exploited. And in my opinion, parents should desist from sending their children abroad for courses that could be offered in Nigerian universities. Such avoidable expense put heavy burden on family finances.”
According to Alima Hamzat, also a banker, school loans facility has been of great help to many parents, especially those whose children/wards attend schools where evidence of payment is required at the gate before students are allowed into the school.
The challenge lies in the fact that banks have to protect themselves from some parents, who after collecting loans relocate to another bank. “So, this is the reason some conditions have to be fulfilled before release of funds. All the charges are in line with Central Bank of Nigeria (CBN) directives, and anything outside this is fraud,” she explained.
She, however, warned parents to be wary of financial houses that would come to them with mouthwatering policies only to exploit them at the end of the day.
She said: “I would also advise parents/guardians to crosscheck the various policies to determine the one that best suits their income. Some banks operate a special school account, which allows parents to pay certain amount into it on monthly basis throughout the year. The advantage in this is that when it is time to pay school fees, the bank is simply directed to pay on behalf of the parents. In other words, everything concerning school fees goes to the bank. The interest on this package is in single digit because banks use the money, when it is not time for fees. This guarantees fast payment, especially when the bank knows that the monthly payment is regular.”
In her view, Mrs. Gladys Ajayi, a school proprietress, said when schools are being too hard on parents to pay school fees, they might be pushed to take their children to other schools, particularly now that the competition is keen in the sector.
She said: “In our school, management addresses parents according to their financial status. So, those that cannot pay school fees at once are made to enter into agreement with the school, but failure to keep to the agreement before the term ends might attract stiff penalty such as withholding the child’s result or resorting to the law.
“For parents that are trustworthy, and who have never defaulted , we spread payment over 10 to 11 month period. The result has been fantastic, as it works for me. It enables parents, especially those with more than two children, to pay according to their financial abilities.”
However, Ajayi said the agreement does not exceed 11 months, so that it does not become a burden. “We usually commit such parents by asking them to sign post-dated cheques, which reflect the periods they have agreed to pay,” she explained.