Education crisis looms with runaway fee hikes
ENROLLMENT CRISIS: Three years ago, the government removed the cap on tuition increases and allowed schools to raise fees to as high as they thought they could gouge from parents and students.
We started to feel last year the foreshocks of the resulting enrolment/tuition crisis, with the killer shock expected to hit hard this year when enrollment progresses in earnest in a few weeks.
In the vortex of this crisis are a few pre-need companies that will not be able to make good their promise to pay planholders’ tuition that had skyrocket as a result of deregulation.
The College Assurance Plan, the most prominently mentioned pre-need company when the problem is discussed, is actually not alone in its predicament. It was the hardest hit, because it sold the most number of these problematic open-ended plans and probably made poor investment decisions.
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FIXED VS OPEN-ENDED: There are other companies that also carry open-ended plans but they are in better stead because they shifted to fixed-value plans shortly after deregulation took effect in 1992. My information is that CAP stopped only last year (some say in 2002).
Open-ended plans promise to pay the tuition regardless of the rate in effect upon enrollment. So a company that went overboard selling open-ended plans will have the biggest payment problem. Fixed-value plans will pay only the amount specified in the contract.
It is obvious that something must be done regarding the open-ended plans begging for funding. But until now, I do not see a solution coming. For some reason, the government, which is supposed to protect the public, is hardly moving.
Maybe the government, through such regulatory agencies as the Securities and Exchange Commission, is waiting for the cancer to spread and hasten the death of the patient. Or are some people in government protecting their friends in the business?
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DEREGULATION: The issue is quite simple: about 25 years ago, pre-need companies promised to pay planholders the tuition of their beneficiaries under the so-called traditional or open-ended plans.
At that time, schools could raise their tuition by no more than 10 percent per year. So the pre-need companies could project with certainty how much they would be paying.
But this element of predictability vanished in 1992 when the government, bent on getting schools to deliver quality education, removed the 10-percent cap and allowed them to raise their tuition without any limit. Deregulation, in a word.
The policy is obviously a messy failure. For one, it sounded the death knell for the open-ended plans and those peddling them with abandon. Woe to the youth whose tuition cannot be paid because, as the problem worsens, the pre-need companies that had made glowing assurances may not be able to deliver.
Ganoon na lang ba? Will parents holding worthless pieces of paper just watch their out-of-school children look for something else to do?
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CALL A SUMMIT: We are talking here just of those enrolling or reenrolling for the coming school year. Some of them will not be able to get the tuition money promised them by pre-need companies that are now short of cash.
Just to illustrate, CAP has 790,000 planholders, of which about 700,000 will file a claim only in the future. When CAP pays the tuition of those going to college or reenrolling this school year, will there be enough money left for those who will enroll only in later years?
Since it is clear that the government is not competent or motivated enough to solve this crisis, there have been suggestions for some kind of an education summit focusing on this particular problem posed by defaulting pre-need companies.
The summit can bring together, so they can think together, all parties with a stake in the problem: government, schools, parents, pre-need companies, et cetera.
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SOLI PERA: There is also this other idea that I pushed in an earlier POSTSCRIPT of somehow forcing foundering pre-need firms to at least return the money — under a Soli Pera program — of those who want to back out now.
One problem of planholders, however, is the provision in their contract that if they return their plan before its maturity, they will not be able to get a full refund. Cannot the government do something to fill the gap somehow?
At the same time, however, I heard that some better-managed pre-need companies are ready to return the money, plus interest, of planholders who want to back out for any reason. This is feasible because pre-need plans are bought and sold in the market.
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EARLY WINNERS: Planholders who enroll now are luckier than those still waiting for their college enrollment years from now. In just one semester, present enrollees — especially those who go to exclusive schools — get more than what they had paid for their plans.
Take the case of Student A. Her parents bought a plan for P15,000 and the pay-out 12 years later is now more than P330,000. Another plan for Student B was bought for more than P18,000 and his claim now amounts to P44,000 per semester.
How much per semester does it take to enroll in the so-called exclusive schools? Here are rough estimates: University of Asia & Pacific, P50,000; Ateneo and La Salle, P40,000. But the average among exclusive schools is around P29,000 per semester.
Compare that with: University of the East, P22,000 per semester; and the Trinity Nursing School, P28,000. The average semestral tuition among non-exclusive schools is P15,000.
This will give away my age, but when I was in UP Diliman, the semestral tuition was only P180!
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ANTI-CORRUPTION NET: Knowing that one-man crusades against corruption in their respective governments may not always bear fruit, several Asian parliamentarians have formed a network against corruption with the United Nations no less as backup.
The Southeast Asian Organization of Parliamentarians Against Corruption (SEAPAC) was formed last week in Manila to ensure that actions and initiatives against graft and corruption in the region will not end up being lonely crusades.
This network of parliamentarians dedicated to fight corruption under its many guises was spearheaded by, among others, Sen. Edgardo J. Angara. He was elected president of the SEAPAC.
Angara said the regional networking would make anti-corruption work easier. The SEAPAC members can exchange information, research and legal work that would lead to legislation.
He said the SEAPAC will also push the effort to have the United Nation’s Convention Against Corruption get ratified by 30 parliaments — the number needed for its formal adoption.
The UN Convention deals with money laundering, corruption of political parties and political parties weakened by corruption, stolen assets of a nation, and transnational crimes.
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CATCH A CAT: A pastor of a local church had a kitten that climbed a tree in his backyard and then was afraid to come down. The pastor coaxed, offered warm milk, etc., but the kitty would not come down.
The tree was not sturdy enough to climb, so the pastor decided that if he tied a rope to his car and drove away so that the tree bent down, he could then reach up and get the kitten.
That was what he did, all the while checking his progress in the car. He then figured if he went just a little bit farther, the tree would be bent sufficiently for him to reach the kitten.
But as he moved the car a little farther forward, the rope broke. The tree went “boing!” and the kitten instantly sailed through the air-out of sight.
The pastor felt terrible. He walked all over the neighborhood asking people if they had seen a little kitten. No, nobody had seen a stray kitten.
So he prayed, “Lord, I just commit this kitten to your keeping,” and went on about his business.
A few days later he was at the grocery store, and met one of his church members. He happened to look into her shopping cart and was amazed to see cat food. This woman was a cat hater and everyone knew it, so he asked her, “Why are you buying cat food when you hate cats so much?”
“You won’t believe this,” she replied and started to tell him the story. Her little girl kept begging her for a cat, but she kept refusing. Then a few days ago, the child had begged again, so the Mom finally told her little girl, “Well, if God gives you a cat, I’ll let you keep it.”
“I watched my child go out in the yard,” she continued, “get on her knees, and ask God for a cat. And really, Pastor, you won’t believe this, but I saw it with my own eyes. A kitten suddenly came flying out of the blue sky, with its paws outspread, and landed right in front of her!”
Never underestimate God’s sense of humor.
(Now, you might want to share your stories about your nice little cat.)