Parents bankrupted as private schools chase fee debt
Parents are being chased in the courts for unpaid private school fees, with some of the state’s leading schools pursuing bankruptcy claims for unpaid bills ranging from $25,000 to more than $400,000.
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Victorian private schools are chasing parents through the courts for unpaid fees, even bankrupting those who refuse to pay their debts.
Some of the state’s leading schools, including Toorak College, Eltham College, Loreto Toorak and Scotch College, have pursued recent bankruptcy claims against parents for unpaid bills ranging from $25,000 to more than $400,000.
Other institutions, such as Geelong, Camberwell, Wesley and Melbourne Girls’ grammar schools have taken similar court action in past years.
It comes as the most expensive schools have reached $40,000 a year, and research shows 70 per cent of parents struggle to pay fees. Victoria’s leading debt collection agency, which has more than 50 independent schools on its books, has reassured parents most schools are not initiating new cases during the coronavirus.
Roger Mendelson, CEO of Prushka Fast Debt Recovery, said schools would wait until next year to chase parents who had not paid fees this year.
“This means the debts are building up. If parents haven’t paid then we will see a spike in February,” he said.
Those who have made deals with schools will be given the time they need to pay, but schools will pursue people they believe have the money to pay, but won’t, Mr Mendelson said.
One school, Oakleigh Grammar, targets such parents in its fee policy, noting that it will use magistrates courts to enforce fee payment, which could end up in bankruptcy or garnishee notices.
One parent who spoke to the Sunday Herald Sun was pursued through the courts for about $90,000 by Loreto Toorak for a debt incurred by his former partner. He filed for bankruptcy.
It comes as schools are warning parents not on hardship plans to pay fee invoices on time, and an increasing number of institutions are signalling that school-wide discounts will not be offered next year.
A report from The Futurity Investment Group, formerly known as the Australian Scholarships Group, revealed 70 per cent of parents felt financial pressure to pay school fees. The survey of more than 1800 parents found even 56 per cent of high-income households earning more than $180,000 felt financially stretched.
Futurity CEO Ross Higgins said the pressure was “undoubtedly being intensified by the COVID-19 pandemic and the uncertainty surrounding individuals’ eligibility for the second phase of JobKeeper payments, mortgage holidays and the easing of restrictions”.
The head of Ballarat Grammar, Adam Heath, said the school always worked with families to resolve financial concerns.
Meg Hansen, the head of Westbourne Grammar, said the school reserved its right “where the contractual obligation has not been honoured to take any further relevant steps it deems necessary”.
The heads of Scotch College and The King David School declined to comment on privacy grounds.
A spokesman for Loreto Toorak said the school continued to support students and parents and that “legal action to recover unpaid school fees was pursued under very rare circumstances, and as an absolute last resort”.
RECENT BANKRUPTCY CASES AGAINST PARENTS
2020
The King David School sued two parents from Caulfield and Avondale Heights for a total of
$410,000.
Scotch College sued two parents from Toorak for $24,764.
2019
Westbourne Grammar in Truganina pursued a parent from Altona Grove for $15,042.
Eltham College pursued a parent from Hadfield for $24,574.
2017
Ballarat Grammar sued a Creswick parent for a 2016 debt of $36,948.
TIPS FOR PARENTS
Make contact with the fees officer – don’t wait for them to contact you.
Come up with a plan of repayment you can afford.
Set regular payments up with your bank.
If you are going backwards again, let the school know in advance.
Source: Roger Mendelson
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