Financial breakdown of VAS revealed through dispute with parents

Parents of expensive private schools are dissatisfied as schools seem hell-bent on saddling them with even the most unreasonable fees

After students were forced to stay home for months during the COVID-19 epidemic, many private schools found themselves in a tight spot and have been trying to charge schools fees in full. The attempt drew public ire as these schools are appearing as the odd one out while the entire society is joining hands to beat the pandemic. Vietnam Australia International School (VAS) in Ho Chi Minh City is a highlight name of this issue.

Parents in panic

Parents at several private schools are dissatisfied as the institutions remain adamant to charge them for school lunch and school bus services even as their children study from home. Marcel van Miert, chairman of VAS, wrote in a letter to parents that the VAS system has accrued some expenses that may increase if the epidemic is prolonged. Therefore, the fees will be necessary to materialise its commitment to parents to make up for the lost months. In other words, VAS will not charge additional fees during the epidemic but expects to collect all fees it would normally charge.

According to dantri.com.vn, the pressure is mounting, reaching the point where parent M.T. has decided to take her three children out of VAS “to avoid damaging their personal development,” she said. “While the whole of society is fighting against the novel coronavirus, we, the parents of VAS students, have to combat an additional virus called ‘tuition virus’.”

With nationwide social distancing in effect over the last few weeks, children have been unable to attend school since early February. During this time, VAS has sent repeated emails to parents, asking them to pay tuition for the fourth term before April 25, despite the fact that students only attended classes for 13 days during the third term (which includes 70 days over 10 weeks) and the school did not return any of the money parents had paid for meals or the school's bus service for the third term.

All fees, including tuition, meals, and schools bus, will have to be paid before April 25. In addition to M.T., most parents of VAS students are dissatisfied as the school shows no intention of letting even the most unreasonable fees go. A parent said that he needs to pay paid VND7.7 million ($335) and VND6.3 million ($275) every 10 weeks for the meals of her middle- and grade-schoolers – and have just recently been notified that the school expects payments in time.

VAS provides online classes, however, many parents claim it is not worth the cost. Students learn six hours of subjects in Vietnamese language, 40 minutes of English, and 4.5 hours of Maths a week, which many claim is very little for VND25 million ($1,080) a month.

Due to not being able to reach an agreement with the school, 200 parents of VAS have recently submitted a complaint to Ho Chi Minh City People’s Committee. In addition, according to the representative of the parents, they will be able to file a lawsuit to the People's Court if VAS’ answers do not satisfy them. To date, the school has remained silent regarding the issue.

Along with VAS, private schools like Newton and Everest in Hanoi are also accused of violating the regulations on charging tuition fees. Newton requested to collect full tuition for the school year despite the poor performance of online teaching in the last two months, which forced parents to spend a lot of time to teach and guide their children in their studies, according to the complaints of a parent on the school's private forum.

COVID-19 – a test for financial health and training quality

An educational expert who wishes to be unnamed told VIR that VAS has been pouring a great deal of money into franchising activities and land leasing costs. All of its seven campuses are located at expensive destinations in Ho Chi Minh City. Therefore, as the crisis thickens and students cannot come to class, its financial troubles are understandable.

“Once the cash flows are interrupted, VAS has to charge all kinds of school fees to cover its expenses,” said the expert.

Moreover, the expenses related to foreign curricula are also pressing schools. According to Nguyen Thi Minh Thuy, principal of Nguyen Sieu School in Hanoi, schools have to incorporate expensive annual fees to teach overseas curricula, so their online tuition fees also have to be significantly higher than public schools that use the curriculum of the MoET.

As a result, with its land leasing costs and the fees for teaching the Cambridge curriculum, VAS is incurring the largest financial pressure. Similarly, private educational institutions with many branches like Newton Grammar School, Apollo English Centre, and ILA Vietnam are having similar issues during the pandemic. Newton Grammar School has even hired lawyers to get parents to pay full school fees.

Additionally, pressures from bank loans have been putting many private schools on the verge of bankruptcy. Most of them are using loan capital to maintain operations and some of them, especially newly-founded schools, are running heavy losses.

Previously responding to VIR, Tran Kim Phuong, chairman of Everest school said that developing a school requires an average investment of VND80-200 billion ($3.5-8.7 million), a significant part of which is usually bank loans.

“We took up a bank loan of VND200 billion ($8.7 million) to develop the school and are paying 12 per cent monthly interest, which comes to VND2 billion ($86,956). Therefore, we need at least 1,500 students to maintain operations. However, currently, Everest has only a little more than 1,000 students. As a result, along with the impact of the epidemic, we have yet to make any profit,” said Phuong.

Economist Nguyen Tri Hieu also told VIR that under the impact of COVID-19, most private schools operate at the breakeven point, leading to a steady loss of liquidity. Furthermore, small schools are unable to keep up with 9-11 per cent annual interest rates. “If the health crisis lasts much longer, they will go bankrupt.”

COVID-19 can be taken as a test of the health of private schools. The more charges an institute is trying to push on students during the pandemic, the more precarious their finances are likely to be.

In contrast with the other kinds of business, the determining factor making or breaking any school is the quality of training. Therefore, to deal with their shared problems, schools should conceive plans to improve their online classes because effective online classes, after all, would be remembered after the epidemic.