Schools in South Africa are using this tactic to get parents to pay up

Schools in South Africa are warning parents that they are at risk of being ‘blacklisted’ for credit if they fail to pay their children’s school fees.

Credit bureau TPN said that fewer than 60% of parents pay their school fees on time in South Africa, with the situation only getting worse after the Covid-19 pandemic in 2020 and 2021.

Many parents are under the misconception that non-payment of school fees won’t affect their credit record, but TPN said that schools could freely list non-paying parents with credit bureaus in the country, which counts against their credit records.

“Independent and fee-paying public schools are heavily reliant on parents to pay school fees,” it said.

“The reality, however, is that less than 60% of parents pay their school fees on time. This has a significant knock-on effect on a school’s finances, severely impacting their ability to meet their operational costs.”

Waldo Marcus, head of marketing at TPN said that recent assessments at four of Johannesburg’s most prominent public schools found that each of the schools has more than R20 million in outstanding fees to recover, with the highest close to R30 million.

“Schools have the ability to list non-paying parents on the credit bureau for free. These adverse listings remain on the credit bureau for 12 months. Parent payment profiles are updated with each payment cycle,” it said.

TPN said that parents who fail to pay their dues are typically sent SMSes warning them of the implications of non-payment, which is often enough to encourage payment.

However, if parents still ignore the warnings, letters of demand are next in line, following which negative information is listed on their credit profiles.

The bureau said that private and public schools in Johannesburg and Cape Town are making use of this tactic to go after non-paying parents and have seen success, with collections improving by almost 88% in some cases.

What does blacklisting mean?

In South Africa, being blacklisted is an obsolete term in law, but is still used by some to describe those who have a record of non-payment of outstanding debt.

This is relevant to any form of credit that has been given: this could be money owned on a bank loan, credit card or store card or even your household bond.

The term “blacklisting” hasn’t been part of the National Credit Regulator’s vocabulary since 2011 and refers back to a time when credit bureaus only kept track of negative or default data on consumer profiles.

For several years now, positive data has also been recorded in credit reports, meaning there’s a greater number of elements included on your credit report to help lenders decide your creditworthiness.

South Africa uses a credit score system to determine creditworthiness.

Your credit score is calculated using your credit report data: the higher the score, the more likely that you’ll be given credit by a lender. The lower the score, the higher the chance a lender may turn down an application for credit.

So while being ‘blacklisted’ may have an impact on your credit score, it is not the be-all and end-all of the equation.

According to finance tracking group ClearScore, every month, how you pay your accounts will be tracked and will affect your score, either positively or negatively.

“Paying on time is positive, but paying late – usually longer than 30 days – or defaulting on payments – if you take longer than 90 days to pay – will likely have a negative impact,” the group said.

Paying off the debts that appear on your credit report on time will help you to prevent negative information from appearing on your credit report and will help to improve your credit score.

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