Parents bemoan further Dubai school fee increases but educators say it’s justified



DUBAI // Parents are frustrated at news that private school fees could rise by at least 2.4 per cent for the next academic year.

The Knowledge and Human Development Authority said on Sunday that the best-performing private schools in Dubai could raise their fees by up to 4.8 per cent.

Many parents were disappointed because their already tight budgets would have to be stretched further to pay for the increases.

Sindhu Pillai, from India, plans to move her daughter, 16, to a different school next academic year so that she can study the subjects she has chosen.

“We are paying about Dh15,000 at Our Own English High School, but having looked at the other schools it looks like we will have to pay much more when she moves,” said Mrs Pillai. “Every year schools keep increasing their fees, so it’s getting more and more difficult for parents on a limited budget to find schools that are in their price range.”

JSS Private School is one option that Mrs Pillai is considering, with existing Grade 11 fees at Dh19,695.

The latest KHDA inspection report rated the school as “good”, which means that fees could go up by as much as 3.6 per cent for the next academic year.

“We will have to make cutbacks and sacrifices on our spending to be able to afford these fees, so it is a worry,” Mrs Pillai said. “One of the frustrating things is that even though the fees go up, the quality of the education doesn’t really follow suit. If schools increase fees they should at least reduce the number of pupils in classes.”

The Education Cost Index (ECI) is calculated by Dubai Statistics Centre and allows schools to raise fees based on their performance in KHDA inspections.

Schools rated as “outstanding” can choose to increase fees by twice as much as the ECI’s base rate, or 4.8 per cent.

“Very good” schools can boost tuition costs by 1.75 times the ECI, and “good” schools by 1.5 times. Schools classed as “acceptable”, “weak” or “very weak” can increase fees only by the ECI’s 2.4 per cent base rate.

An Indian mother with a son in Year 12 at Emirates International School in The Meadows said the news was worrying.

“We’re paying just over Dh70,000 for my son and the thought of another increase is something I’m dreading,” she said. “We already pay so much money and then the teachers leave and temporary staff get used, and it’s very frustrating.”

Continuing fee rises and static salaries for most people were causing a huge drain on household incomes, she said.

“Fees increase while people are losing their jobs, so I just can’t see why they are justified. I know there are running costs and you need to attract and keep hold of the best staff, but teachers continue to leave. We aren’t getting new buildings or subjects,” she said.

The mother said a friend had returned to Canada because of the increasing cost of education in Dubai, and the Canadian friend was now paying less for a better quality of education.

But Jeff Evans, managing director of Learning Key Educational Consultancy, said the fee rises were fair because schools had to meet rising operational costs, as well as recruit and train teachers.

“Some mid to high-fee schools are offering comparable standards of education to the high-profile ‘big name’ premium-fee schools, so I would encourage parents to read inspection reports carefully,” he said.

“All schools that increase fees need to reinvest the additional funds wisely in areas that directly benefit the quality of education. Parents are customers and must be convinced that their investment in education provides good value for money and is not just additional profit for individual owners or larger companies.”

Mark Steed, director of Jumeirah English Speaking School Dubai, said the subject of school fees was emotive but the ECI was an important tool to “protect parents from profiteering”.

He said it could be argued that “good schools have the income to get even better, whereas weaker schools are caught in a poverty trap by not having the capital to make necessary improvements”.

Mr Steed added: “All schools should be transparent about the percentage of school fees that goes on profit to the investors, so that prospective parents can make an informed choice of school.

“At Jumeirah English Speaking School Dubai, we publish these data on our website and 100 per cent of any annual surplus is reinvested in the school.”

nhanif@thenational.ae

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”