With the introduction of 5% VAT across all goods and services in the UAE this year, many residents are feeling the pinch. And, although educational institutions (apart from higher education institutions) are zero-rated for VAT, three schools in Dubai (so far) have taken the unusual decision to lower their fees in order to be more affordable.
The most recent school to take make this move for the next academic year (2018/ 2019) is British-curriculum school Horizon International School in Umm Sheif, which has lowered the fees for its secondary school by up to 33%. “The actual discount varies from 7% in Year 5 to 33% in Year 11 and our 6th Form,” says Lee Davies, Headmaster at Horizon International School. “Our fees start at Dh34,517 for Foundation Stage and now only rise to Dh65,000 for 6th Form (Year 12+13).”
Unsurprisingly, the move has been welcomed by parents, says Davies: “Parents are delighted – especially when they learned it is not a discount, but a restructure, so no nasty surprises down the line.”
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Studies show that costs in Dubai have risen across the board in recent years, which has led to many residents, especially those with families, finding it more of a challenge to make ends meet. The price of ‘miscellaneous goods and services’ leapt by a whopping 11.2% within a year, according to a June 2017 report by Dubai Statistics Center (DSC), while prices in the Transportation group rose by 5.5%, and in the Education group by 5.2%.
Dubai made it into the top 20 most expensive cities in the world for the first time in Mercer’s Cost of Living Survey last year, and salaries have not been keeping up with the rise in costs, says analysis by Oxford Economics, which predicts that household incomes will stagnate in 2018.
It’s become the number-one stressor for Dubai residents, found a survey by YouGov and Bayt.com, in which 66% of people saying that high prices contributed most to their stress levels. Add to this the newly introduced 5% VAT on all goods and services and a decrease in fees by schools like Horizon International couldn’t have come at a better time.
“We had a number of parents approach us sharing their personal concerns about in particular the higher cost of education in the senior years. Some were having to leave,” explains Horizon International Headmaster Lee Davies. “Our investment company Al Najah also welcomed a new CEO, Mr Raza Khan, who was equally concerned at the cost of education specifically in our more senior years. He wanted to ensure we were able to support our parents, but also support the wider Dubai community by making a premium British education more affordable.”
Although VAT is not applicable to school fees directly, Davies and his team recognize that it has had an impact on the overall cost of living: “So to keep affording the school fees, savings have to be made elsewhere. A challenge!” continues Davies. “We have therefore reviewed costs and expenditures and identified what we need to ensure there is no impact to the quality of our education. Reducing the fee burden in the highest fee points can only be good news for our families, but also for Dubai as a whole to ensure affordable options are available to parents.”
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A future trend?
Fiona Mckenzie, Director of educational consultants Gabbitas Middle East, says that this is a refreshing trend that we may be able to expect to continue. “Many schools in the region are addressing the issue of affordability,” says McKenzie. “There have certainly been other schools who have lowered their fees recently. Repton and Foremarke reduced their fees last October with a view to making sure that parents can continue to access their education. They also introduced scholarships as part of a widening access policy.”
With the increasingly competitive education landscape and an oversupply of school places in the market, addressing the fee structure is one way that schools can continue to appeal to parents, McKenzie continues. However, she warns that this strategy is only good for parents if the quality of education isn’t affected with less qualified staff of a reduced curriculum: “Schools are under pressure with increasing costs such as the new teacher licensing, so there is a limit to how much they can cut their fees and still continue to provide the level of education that parents expect.”
While it’s certainly not all down to the introduction of VAT, there has been a shift in mood when it comes to affordability of education, says McKenzie: “Schools are recognising that the economic climate has changed and parents are much more price-sensitive to education than they used to be, partially because the expat packages are not as generous as they were in terms of covering school fees. School fees are now a bigger percentage of overall family expenditure and for families who are used to a free education in their home country this takes some getting used to.”
So what’s the advice for parents who may be concerned about affording school fees now or in the future? “School fees are a part of life out here, to some extent as with most things you get what you pay for,” says McKenzie. “However what is great to see is with the maturing of the market here that there is much more diversity on offer. You can pay upwards of Dh100,000 a year at some schools for an IB Diploma, but equally there are schools where you can pay less than Dh50,000. Parents also need to check what is included in the school fees. Some schools like Arcadia Preparatory school include uniform and all extracurricular activities as part of their fees – so it is important to compare like for like. School fees are carefully regulated by KDHA and managed through the inspection system and schools can chose whether to implement the fee increases or not – what we are starting to see is that in the current climate some of them are choosing not to increase their fees and I think this will continue to be a trend for the foreseeable future.”
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