The legal consequences of unpaid school fees in SA

Although April saw a slight slowdown in inflation, the general indication from analysts has been that there is unlikely to be an interest rate cut this year. High interest rates and static household incomes have continued to keep enormous pressure on parents in respect of their fee obligations with schools. This would inevitably affect the sustainability of fee-paying public schools and independent schools alike.

Independent school fee accounts in good standing drop

TPN Credit Bureau’s latest data on school fee payments for public and private schools indicates that there has been a further decline in the number of school fee accounts in good standing during the first quarter of this year. 66% of independent school fee accounts were paid on time and in full as per school fee agreements. Comparably, this was better than the 42% of fee-paying public-school accounts paid on time and in full. Concerningly, however, independent school fee accounts in good standing in Q1 of 2023 stood at 75% and has since seen a downward trend.

Fee paying public schools are hardest hit. In the first quarter of 2024, 30% of parents made no payment toward their fee obligations, whilst 22% made only partial payments. Only 28% of school fees were paid on time during this period. Independent schools had, however, seen better collections. Only 15% of parents and guardians made no payment towards their school fee obligations, while 32% made partial payments.

Unlike parents and guardians of learners at fee-paying public schools (who are afforded greater protection if they default on school fee payments per the South African Schools Act “SASA”), the basis of the legal relationship between an independent school and a parent would be the enrolment agreement or fee agreement. Accordingly, independent schools are afforded more bargaining power as the obligation to pay school fees flows from the contractual agreement between the parent or guardian and the school. If a parent defaults on school fee payments, they would be in breach of the agreement and the independent school is entitled to send a 20-business day Letter of Demand in which they demand outstanding payments. Should the parent fail to remedy this breach, the school is entitled to follow various legal debt collection options.

The legal consequences for defaulting parents

Some of the legal consequences that defaulting parents should note:

• Independent schools are entitled to adversely list defaulting parents for the non-payment of school fees once the requirements cited in the National Credit Act 34 of 2005 and its’ Regulations have been met.
• Independent schools are entitled to seek judgement for the non-payment of school fees.
• Independent schools are entitled to seek an order attaching movable and immovable property for the non-payment of school fees. The High Court has previously indicated that there is no legislative provision which would prevent an independent school from attaching immovable property in respect of a school fee debt.
• Independent schools may suspend or expel a learner for the non-payment of school fees. This should, however, be a means of absolute last resort as the school should not unreasonably impair or disrupt the basic education it provides to learners. Emphasis is placed on the Constitutional Court’s previous decision, in that a school cannot terminate a learner’s education without appropriate and substantively fair procedure.

Are schools allowed to withhold reports due to non-payment of school fees?

Independent schools and public schools are, however, not entitled to withhold a report based on non-payment of school fees. Section 25(12) and section 25(13) of the National Protocol on Assessment 2011, confirms both Public and Independent Schools may not withhold an academic report for any reason.

Section 29 of the Constitution does indicate that everyone has the right to basic education. It is, however, imperative to remember that the obligation lies with the State to provide this, and not an independent school.

Rethink the way your school manages cash flow

The non-payment of school fees for independent schools, who are self-funded, could affect the sustainability of these very schools. Schools would be unable to maintain their current infrastructure, supplement teacher posts to reduce class sizes and provide the necessary resources to insure a high-quality education for our students. Schools should review all possible solutions so that that school fees are paid timeously and in full.

To find out how TPN can help you assess the financial health of parents to minimise admission risk, significantly improve cash flow and remain complaint with all legislation to protect your school, visit our website here.

By: Ashleigh Laurent, TPN Legal Counsel