On a budget and a prayer: The struggle for survival of low-cost pvt schools

Closed by Covid-19, budget private schools are struggling to cope and many could collapse without timely intervention

K Tulasi Vishnu Prasad is worried.  He — like his father and before him, his father — has invested his life in the Sri Rama Rural School of which he is the president. The school was set up in Chilumuru, a rural hamlet in Andhra Pradesh’s Guntur district, by his grandfather in 1949, years before the state came into being.

Even in the early days, families living hundreds of miles away would send their children here. Students would also travel by boat upstream from Kollur, 4 km away, to attend classes. Today, a pandemic is keeping them — some 900 boarders and 600 day scholars — away. And it has left Prasad struggling to find a way forward.

“We are already more than three months into the academic calendar but the school hasn’t opened because of the virus. Teachers are waiting for their salaries. How do I look them in the eye?” he says. Prasad’s is an unaided budget private school. And even though it is a legacy school with a strong reputation in the area, like most such schools, student fee is its primary source of revenue. The fee is used to pay the staff their salaries, and also to meet utility and maintenance costs. Some in the staff have been with the school since the 1970s. “We live on the campus and are like a big family. We are not like an elite corporate school; our fee is low and our resources limited,” says Prasad.

Prasad is vice-president (quality) of the National Independent Schools Alliance, a platform that represents over 36,400 budget schools, covering about 9.35 million students. Many of these schools are now staring at uncertainty. And, therefore, so are their students.

Within the education sector, the pandemic has hit affordable private schools the hardest. The livelihoods of a sizeable chunk of people who send their children to these schools have been impacted. Incomes have shrunk and many have lost their jobs, which has, among other things, affected their capacity to pay the school fee on time.

“Very few ALPs (affordable learning providers, or budget schools) will be able to absorb this financial shock and a vast majority of them will find it untenable to continue paying salaries to their teachers,” states a report, The Indian Edufinance Success Story: Lessons for Other Emerging Nations, released by education-focused asset manager  Kaizenvest  earlier this month. “As many as 75-80 per cent ALPs have availed of the moratorium on loan repayment provided by lenders to their borrowers as part of the relief package designed by the Reserve Bank of India. The need to support the ALPs financially, through suitable credit facilities, for example, is now more dire than ever before,” the report adds.

Affordable or low-cost schools, which typically charge a fee of Rs 100 to Rs 1,000 a month, play a critical role in the education of underserved students in a country like India. Considered a notch above government schools, these are perceived to offer better quality of education (the aspirational English-medium education) than government schools. “Often, dysfunctional government schools and sustained failure on the state’s part to solve even the most basic issues, such as teacher absenteeism or quality of teachers, have led to low-income parents walking out of government schools and opting for budget private schools,” says

K Yatish Rajawat, CEO of Centre for Civil Society (CCS), a Delhi-based non-profit think tank that works in the field of education, among others.

The Kaizenvest report lists some other factors too: Despite getting lower salaries than their peers in public institutions, teachers here seem more committed and hardworking; and also parents from the lower socioeconomic strata feel that they have relatively more social equity and are, therefore, more comfortable dealing with these institutions.

The report says that some of these families, which are typically engaged in blue-collar jobs (daily wage workers, autorickshaw drivers, vendors), spend as much as 10-15 per cent of their household income on their children’s education even when public education is available for free. “Since these children are enrolled in private schools, government schemes such as scholarships are not available to them,” says Rajawat.

He explains the place budget schools occupy in the Indian education system: Out of 1.5 million schools in India, approximately 300,000 are private schools. Within private schools, high-cost schools constitute a relatively smaller subset: CBSE (about 22,000 schools); ICSE (2,200); IGCSE/IB (800-1,000). Budget private schools form a much larger chunk, at 275,000.

Estimates, however, vary with some putting the number at 200,000-400,000. According to a report by social impact consulting firm FSG, approximately 79 million students attend budget private schools. And 60-90 million children are expected to go through these schools over the next few years. “That’s about 30 per cent of all our students,” says Rajawat.

With the schools and their students now struggling, strategic and committed interventions are needed if we do not want the pandemic to leave an adverse impact on education. “In any calamity, children’s education is among the first to get impacted,” says CCS Director-Programmes Rohan Joshi.

One option, which is being exercised by institutions and the students with the means to do so, is to take the classroom online. But a large section of students who go to low-cost school do not have access to the necessary technology such as smartphones, tabs, computers or laptops.

“Making smartphones, or such devices, available to poor families is a doable solution. It can be achieved through government support or by encouraging companies to spend their CSR (corporate social responsibility) money on it,” says Joshi.

There have also been reports of local government authorities, who are not responsible for education, giving orders that schools should not collect fees. Such directives have created conflict between parents and schools. “While it is understandable that given the situation, it might not be easy for parents to be able to afford the entire fee, a midway could be worked out,” suggests Joshi.

Say, the schools could be allowed to charge the tuition fee and not the development charges. “This way they can at least retain two-three teachers and offer online classes.”

Thirdly, he adds, space could be created by the government for educating the underserviced children in these exceptional times, such as through TV channels or programmes dedicated to subject-specific education. The Uttar Pradesh government, for example, is using WhatsApp, radio and TV channels to provide education to school students.

The one thing that could have a long-lasting, sustainable impact is access to systematic finance, allowing schools to invest in technology-based solutions and provide distance education.

Securing credit was always a challenge for affordable schools. The situation, however, did improve with the establishment of the first ALP-focused non-banking financial corporation, the Indian School Finance Company (ISFC), in 2008. Then in 2013 came the Thirumeni Finance Pvt Ltd, which operates as Varthana. A year later, another edufinance provider, Shiksha Financial Services India, was set up.

Measuring learning outcomes in students studying in affordable private schools, however, remains a challenge. “Stand alone solutions like good content, teacher training, assessments and remedial education in singularity do not sufficiently address the learning outcome challenges in affordable private schools,” says Prachi Windlass, director, Michael & Susan Dell Foundation India, which has invested for different models in companies like Varthana, Shiksha, Toppr and ClassKlap to measure these outcomes.

The Kaizenvest report points out that ISFC, Varthana and Shiksha collectively provide edufinance to over 10,000 ALPs in India and have a loan book of over $200 million. And while experience in India suggests that “ALP lending is relatively safe,” delinquencies have been rising since the slowdown in the NBFC sector post-2018 “and have further gone up recently due to the devastating impact of Covid-19”.

The report found that until now, all the ANBFCs together have addressed less than 10 per cent of the registered affordable schools, so there is significant headroom for growth.

The pandemic has, however, thrown in big challenges. Varthana is trying to help by creating a digital platform for distance teaching in partnership with Google, ed-tech platform Toppr and Pratham, an NGO working to improve the quality of education in India. This is being provided free of charge initially to its affiliated budget schools.

There are other such interventions, paid for or free. Prasad of Sri Rama Rural School has turned to one in Andhra Pradesh. He says he is still in a better situation than many other budget schools since his school has the wherewithal to offer online classes. Not many others are, however, in his position and could, without timely intervention, collapse.