Trouble for private schools in South Africa

Tuition has beaten inflation, on average, every year since 2012, and one of the top financial concerns among South Africans in 2024 is the cost of school fees—with some private schools already flagging distress signs.

While South Africa’s low-income and middle classes have been hit with high costs of living, interest rates, and fuel prices, the rich and those who can afford private schools have not been immune to the prevailing conditions.

The financial pressures stemming from high interest rates and a sluggish economy have now impacted South African private schools, as some young families face financial strain.

This was particularly a concern in Curro Holding’s trading statement at the beginning of the first quarter of 2024.

The Curro Group manages 182 private schools across the country.

The group recorded a “credible operating performance,” generating strong cashflows during the 2023 financial year and maintaining a healthy financial position.

However, the group highlighted a concerning trend across its schools. Enrolment numbers show that some parents are struggling due to the higher cost of living in South Africa.

In February 2024, Curro had 73,159 registered learners, which was a 1.9% increase from the 71,809 registered learners in November 2023.

Despite this increase, enrolments remained virtually unchanged from the 73,047 learners in February 2023.

The group noted that high schools are experiencing expected growth, but the challenging impact of higher interest rates on constrained consumers, especially young families, means that enrolments in the earlier grades are struggling.

The group said that young families have been hit hard by the rapid hikes in the cost of living in South Africa, resulting in a reduction in enrolments of learners in the youngest grades of primary schools.

This financial burden on South Africans, including young parents in the income bracket for private schools, comes amid other warning signs of distress across middle- to higher-income industries in the country.

This trend is not surprising considering the price increases in school fees over the past decade.

Parents in South Africa should expect little relief in 2025, as school fees are expected to increase above the general inflation rate.

The South African Reserve Bank (SARB) forecasts that general inflation will average 5.1% in 2024.

Reports suggest that parents can anticipate fee increases of between 6% and 10% for both government and private schools.

It’s not uncommon for school fees in South Africa to rise about 2.6% above inflation annually since 2012, except for 2021.

The SARB reports that the school fee index has risen 22.8% higher than the Consumer Price Index (CPI) from 2011 to 2021.

In 2024, fees for boarding and day schools in the 40 most expensive schools in the country increased by an average of 7.3%, which is a couple of percentage points above the SARB’s expected inflation rate of 5.8% for the 2023 financial year.

This comes at a time when salaries in the country have been eroded, with the average take-home pay increasing only by 1% over the past seven years while inflation increased by 40%.

As a result, DebtBusters’ third annual Money Stress Tracker survey reveals that school fees are still a major concern for South Africans, partially those between the ages of 25 to 44.

The Money-Stress Tracker, published and conducted by DebtBusters, surveyed 26,000 South Africans who are not in debt counselling.

According to DebtBusters’ data, these age groups are concerned about affording school fees at the same level as they are about inflation, living costs, and interest rate increases.

The research further highlighted that 62% of South Africans earning over R20,000 have unsustainable debt levels. Of these, 46% spend 50% or more on debt repayments.

Read: What you need to earn to send your kids to the best-performing private schools in South Africa