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No fee limit for new schools

School fees in Dubai continue to become more expensive as new private schools are being allowed to charge fees based on their ‘business model’. Most new schools opening in Dubai are looking at fee structures in excess of Dh20,000 per annum as they are allowed to enter the market with any fee structure.

The existing fee regulations do not apply for a new school since they are not allowed to increase fees during their first three years of operation. However, older schools in Dubai have their fees regulated under a fee framework issued by Dubai’s Knowledge and Human Development Authority (KHDA).

Speaking exclusively with Khaleej Times, Mohammed Darwish, Chief of Regulations and Compliance Commission at the KHDA said: “All new schools have the freedom to enter the market with fees that they feel are appropriate.”

New schools are taking maximum advantage of this ‘freedom’ as they benefit from a higher income allowing them to recruit better-quality teachers and invest in better facilities. “New schools enter the market with a fee structure that suits their business model and takes into account their immediate expansion needs. A new school cannot increase fees for the first three years of operation, after which the fee framework applies,” said Darwish.

Fees at private schools in Dubai have increased by an average 4.7 per cent, according to figures provided by the KHDA. The figure will continue to increase with six new schools planning to open this year.

Most new schools plan to follow a higher fee structure than existing schools, leaving little choice for parents looking at affordable education. Khaleej Times investigated the issue and found several school investors planning to cater only for the ‘premium’ market because of the fee advantage.

Three new schools opening in Dubai this year include GEMS New Millenium School, Springdales School and Union Indian International School. All three schools will cater to the ‘premium’ segment with fees expected to be around Dh20,000 for kindergarten classes.

Dino Varkey, Group Chief Operating Officer for GEMS Education, hinted that the fee policies in Dubai needed improvement.

“All schools need to be viable in order to re-invest in improving quality. Banks will not provide funding for a school that is not a viable proposition,” Varkey said.

He called on the authorities to consider a ‘new fee framework’ keeping in view the long-term future of affordable schools in Dubai.

“New affordable schools are opening with fee levels beginning at Dh20,000, for kindergarten. The average fees for many of GEMS affordable schools is approximately Dh8,000 and this includes provision up to grade 12,” he said.

Ziad Azzam, CEO, Taleem Education, also cited concerns with the existing fee framework as he said, “A ‘one-size-fits-all’ approach is bound to have negative consequences, and we look forward to a time when there is enough choice for parents for a free market to determine pricing.”

He also cited that the increasing number of private schools would lead to an increased difficulty in hiring teachers.

“With the international market for private schools growing at an unprecedented pace, the competition for the very best teachers is fierce,” said Ziad.

While new school operators make the most of unregulated fee policies, existing low-cost schools are facing an impending closure as fee-increase policies do not support their needs.

Schools charging less than Dh500 as tuition fees have little chance of survival as teacher ‘turnover’ rates are on the rise and overall expenses are also increasing.

Last year, one such school in Dubai’s Al Qusais area was allowed an increase of eight dirhams only, based on a three per cent increase allowed on the basis of it’s ‘acceptable’ rating. With newer schools offering better facilities at a higher cost, Dubai’s oldest schools face an increased risk of shutting down.

In 2012, a total of 129 schools were given fee increases — 104 of these were profit schools, four were embassy schools and 21 were non-profit schools. Only six schools in Dubai did not request for a fee increase last year.

While fee increases are necessary for schools to meet escalating costs, an increasing disparity between low-cost and premium schools raises the question of whether the fee policies will be effective in the long run.

According to sources, schools will be allowed to increase fees this year also, keeping in view the education cost index and school inspection rating. — muaz@khaleejtimes.com