The start of the new academic year brings financial challenges for households and with the rising cost of education, budgets are being stretched even further, according to Sebastien Alexanderson, Head of National Debt Advisors.
Alexanderson said that a report by the South African Reserve Bank (Sarb) has revealed that school fees have increased by an average of 2.6% above inflation annually since 2012.
Factors that have pushed up the cost of school fees include:
- above-inflation teacher salary increases
- higher municipal rates
- a growing number of fee defaults, shifting financial pressure onto paying families
"Education costs are rising at an unsustainable rate compared to stagnant household incomes. Over the past seven years, South African salaries have only risen by 1%, while inflation has surged by 40%, eroding real purchasing power," Alexanderson said.
"This widening gap between rising fees and stagnant incomes forces families into tough financial decisions and, in many cases, increases reliance on debt."
While general inflation has cooled reaching a three-year low of 2.9% in November 2024, school fees continue to rise.
Some private schools have already announced fee hikes of around 7.5%, consistent with Sarb's projection of a 7.7% rise in school fees, according to the Federation of School Governing Bodies (Fedsas).
Public schools are also adjusting their fees in response to increasing operational costs, with the hike in costs ranging from 5% to 8%.
Alexanderson said: "These increases are creating a steady rise in bad debts and fee exemptions. More families are struggling to meet their obligations, especially under the financial strain of the current economic climate."
Here are four tips to help families navigate these rising costs:
- Research financial aid and scholarships: Various educational institutions offer bursaries or scholarships to students based on academics, athletics, or financial need.
- Discuss payment options with schools: Open a dialogue with the school to explore payment plans, early payment discounts, or sibling discounts.
- Cut back on non-essentials: Assess monthly spending and then prioritise the essentials over luxury items or frequent buying of takeaways.
- Get professional advice: Consult a financial advisor or a debt counselor if people are feeling overwhelmed by balancing education costs with other financial obligations.
Alexanderson said that planning and budgeting are vital to managing these costs.
Families can avoid falling into debt as well as secure quality education for their children by being proactive and seeking assistance where necessary.
IOL Business