PMK founder S. Ramadoss on Thursday said that private schools are finding innovative ways to collect fees by joining hands with financial institutions that fund the entire school fees and later, parents are forced to pay them back in instalments with high interest rates.
In a statement, he condemned the practice and alleged that private schools in the state have tied up with financial institutions and are forcing the parents to join these schemes.
Mr. Ramadoss pointed out that if there are 1,000 students in a school and if the average fee per student is ₹50,000, the financial institution will pay the entire ₹5 crore to the school and parents have to pay them back in 12 instalments. On the face of it, the scheme looks like it is beneficial to parents, however it is equal to the practice of usury, he added.
Even though the financial institution charges an interest of 12%, parents would end up paying 19.72% as interest at the end of 12-month instalments and schools won’t bear the interest, Mr. Ramadoss said.
He alleged that schools are charging an interest of 22.72% directly and indirectly on the fees.
The financial institution has pointed out that no documents are needed for availing of the loan, however if parents are unable to pay, they will freeze the certificates, Mr. Ramadoss said.
He pointed out that despite the State government directive on not collecting fees, schools are adopting different methods which is unjust, and must be stopped.
The State government should take strict action against private schools forcing parents to pay fees and finding innovative funding schemes and not just stop with warnings, he said.
