Private school VAT death knell for sector

He gives a wry smile when I ask him whether he’s considered not sending his son to a cramming school to prepare for university entrance exams.

“I could have. He’s a very good student with a good educational background. But I didn’t dare. The exams are so competitive that a cramming school is almost a must,” 48-year-old pharmacist Babis Seiradakis tells Kathimerini.

His son is 18 and will be a senior this year, vying for a place at one of the country’s public universities.

Thodoris Bablenis, meanwhile, is a 49-year-old veterinarian and is planning to send his 13-year-old daughter to a private school as of this year. Talking about the education choices parents have to make, he asks why some people believe that a private education is an option considered only by the wealthy.

Parents in Greece have been having a tough time with the confusion over the possible imposition of a 23 percent value-added tax on private education, one of the measures the previous SYRIZA-led government signed with the country’s creditors as part of a third bailout deal. The party had initially said that it would keep the measure despite reactions from educators and parents. Over the past few days, however, it has done a U-turn and asked the caretaker government to postpone the implementation of the tax, putting the onus on the creditors.

Parents and educators have not been pacified because the measure is still on the table and will have a domino effect if introduced. To begin with, it will increase the cost of private tuition – which the majority of public school pupils also have to supplement their education. It is estimated that it will also push some 20,000 students from private institutions into state schools, which are already braced for a new academic year with massive staff shortages. And of course the increased cost of services is expected to exacerbate unemployment among educators and educational institutions too.

Just a few days ago, in fact, one of the longest-surviving private schools in the Attica region, the 84-year-old Michalopouleio, located in a working-class neighborhood of the port city of Piraeus, was forced to close its doors.

A study in the sector presented by Kathimerini, meanwhile, backs educators who stress that the majority of students at private schools are from middle-income rather than wealthy families.

“The recession, the rise in unemployment and higher taxes have drained households’ disposable incomes. The 17.4 percent drop in the number of students between 2008-09 and 2013-14 is to a great degree a result of the recession, while an uptick in 2014-15 is related to the temporary stabilization of the economy in 2014,” says business consulting firm Stochasis in a study carried out in July for the Association of Private School Owners.

“In response to the recession, private schools have reduced their fees. Average fees have dropped from 2012-13 to the present by 7.4 percent in primary education and by 5.3 percent in secondary education,” the study says.

The cost of getting a child up to speed for university entrance exams is calculated at an average of 14,000 euros over the course of high school. According to the association representing cramming school (frontistirio) teachers in Attica, the cost starts at 1,200 euros a year for ninth-graders, rising to 3,700 euros a year for seniors. At the same time, according to the Federation of PALSO Foreign Language Center Owners, the monthly cost of learning a foreign language ranges from 30 to 170 euros. As far as private schools are concerned, their tuition fees vary greatly, but on average these will be bumped up by 1,000 to 2,000 euros per year with the 23 percent VAT.

“We had planned for the new year after talking with the parents as well,” says Xenophon Stergiadis, owner of a cramming school. “Now everything’s up in the air.”

“When it was announced that the measure might be frozen, we had 40 students renew their enrollments within two days,” says a private school owner who declined to be named. “A couple of days later, 25 parents said they would be re-examining their decision to enroll their children.”

The president of the private schools’ association, Haralambos Kyrailidis, expressed concern that the measure will not just strike a blow to private education but will also boost practices of working off the books or not declaring revenues.

Some 200,000 parents have signed a petition in protest at the VAT, while the association has taken recourse to the Council of State, the country’s highest administrative court.