Hubris among International school operators

The current Covid-19 induced societal, health and economic disruption has resulted in potentially fundamental radical changes in how we live and work moving forward. This has caused tremendous economic dislocation and we are possibly on the threshold of a global depression that could be worse than the Great Depression of the 1930’s.

Despite the gloomy macro and microeconomic picture, one sector of business seems to have their heads in the sand – International schools.

But before we examine that phenomena, let’s take a look at the industry.

ISC Research’s Market Intelligence Report for Malaysia, the total number of English-medium international schools in the country have increased by 75 percent since 2012, and student enrolments have also gone up by 87 percent. A further 12 new international schools opened in the 2018/19 academic year. There are now approximately 80,000 students studying in international schools.

Approximately 80 percent of students attending international schools today are the children of local families who hope their kids can get an English centric education and a leg up in the future.

Since the MCO started 2 months ago, schools have been going on full e-learning mode to varying degrees of sophistication depending on how prepared they are with relevant e-learning tools.

E-learning is ready for prime-time but it is not, and never will be a substitute for face-to-face learning. Global experts have been advocating blended learning for years which is the combination of face-to-face learning, 2-way learning online via video conferencing tools as well as online lectures, webinars, podcasts and other digitised material.

Online learning cuts the cost of delivery while at the same time increases retention and engagement among students. The costs of these solutions can be quite affordable. For example, only costs USD60 per annum (about RM 20+ per month)!

However, it is not a substitute for face-to-face learning provided by the school environment.

International schools however seem to feel that they are performing their roles as per normal and are shockingly choosing to continue charging parents normal fees with token discounts of 5 to 15 percent being offered!

In essence, they are trying to make this a net revenue neutral exercise for them!

If schools are closed, essentially, they save money on running costs of the buildings and facilities in areas such as utilities, cleaning and security staff (which is normally outsourced).

From a service delivery perspective, however, the parents (who are the customers of the school) are shortchanged. Not only do they have to supervise their own kids, the quality of education is lower and absolutely no access to normal facilities and interaction which normally an international school provides.

In the corporate world, no vendor will dare charge customers the same fees while delivering lower quality of services. Essentially, they would be setting themselves up to lose customers or worse still, open themselves up to lawsuits.

Schools are also able to act in an arbitrary manner because parents have to pay deposits prior to children entering the schools and therefore, if at least a term’s notice is not given, the deposit is forfeited. So, essentially for most parents, pulling the kids out of school is not an option and hence, they are at the mercy of the school.

What these schools don’t realise is the threat of being out of touch with the market, as well as  potential disruptions to their business model by alternative providers such as homeschooling which is a viable alternative product, if they blend it with e-learning.

After all, the MCO has been a game changer for how we work, live and study.

In an article in the Edge Financial Daily in 2018, Eduseeds Sdn Bhd founding chairman Kevin Gan Muk Chun, said that “There are easily more than 100 [homeschooling] centres in the Klang Valley alone.” Eduseeds is a home-grown virtual curriculum provider for private learning or homeschooling centres.

Gan, who manages five such homeschooling centres in the Klang Valley( at that time), is among a growing number of educators benefiting from parents clamouring for cheaper and more effective educational alternatives to what they perceive as a poor national school system and the high cost of international  schools.

Industry players report that, on average; homeschooling centres enjoy a profit margin of between 20 percent and 40 percent. Across the Klang Valley, homeschooling centres’ monthly fees range from RM700 to RM2,500 per month.

“If my centre can make a 35 percent profit from a monthly fee of RM1,300 per student, how much more profit do you think a RM2,000 fee could command?” a homeschooling centre operator said in the Edge article.

So, what is the middle ground here for the schools and parents, particularly for the majority of middle-class parents who make tremendous sacrifices in order to send their kids to international schools?

My daughter studies at UCSI International in Subang Jaya. Parents across the board have requested a reduction in fees. I proposed something which I felt was logical and fair to both the school as a business and to parents which is to split the fees by timeline and service delivery in the following manner:

  1. Pre-MCO it should be 100 percent of fees payable as full service was rendered by the school.
  2. During MCO, it should be based on the number of hours of online teaching delivered versus what is normally delivered via regular school hours. A reduction in fees should be calculated based on service delivery, with some quantum of discount added on for the fact it is only e-learning.
  3. No miscellaneous fees should be charged, given that no facilities are being used.

The school’s response was a feeble one, that is, their business rental is not being reduced!

And, to top it off – NO DISCOUNT on fees, but payment deadline extended for one month!

The Ministry of Education as the regulator, should come out with a clear policy that is fair to parents. Otherwise the schools will continue to do as they please.

Minister, this is an opportunity to display decisive leadership, protect voters and set yourself apart from discussions about drinking warm water to neutralise covid-19, Doremon, Tik Tok and wearing of Hazmat suits!

By Brian Fernandez

Brian Fernandez is a former business presenter at BFM and at MoneyFM in Singapore. He heads Talent Search International, a regional executive search company and in January launched, an e-learning business.


Please enter your comment!
Please enter your name here