BIZ BUZZ: ‘Paved with good intentions’ | Inquirer Business

BIZ BUZZ: ‘Paved with good intentions’

/ 02:09 AM May 29, 2023

The intention is laudable. But the method, maybe less so.

We’re talking about the proposals lodged in Congress to prohibit the “no permit, no exam” policy, which many struggling private educational institutions fear will push them into bankruptcy.

At present, there are two proposals of this nature lodged in the legislature: Senate Bill No. 1359 and House Bill No. 7584. If enacted into law, schools will be prohibited from imposing a policy that will prevent students with unsettled financial obligations from taking examinations.


Representatives of the private education sector reached out to Biz Buzz pointing out that many schools are still reeling from the effects of the COVID-19 pandemic, especially since many reopened their doors only last year, a full two years after the public health crisis erupted.


Unsurprisingly, many are now operating at a loss.

A study by the Catholic Educational Association of the Philippines in April 2023 showed that about 49 percent of the 224 basic education schools surveyed are financially in the red or are only breaking even, in terms of monthly expenses compared to monthly collections. The rest reported that they only have meager profits, at best.


The same study showed that 64.2 percent of the 53 colleges and universities respondents also reported that they are already at a loss or just at a breakeven point.

There is also a recent study conducted by the Philippine Association of Colleges and Universities where 27 private colleges and universities in the country showed that as of now, tuition and other fees collections can, on the average, only cover about seven months of operating expenses.

In this study, it was also bared that if the “no permit, no exam” policy is prohibited, the financial capacity of these schools would weaken significantly. Tuition and other fees would now be able to cover only two months’ worth of operating expenses on average.

There are proposed safeguards on the bill being heard in Congress. To ensure that parents will still pay the tuition and other fees, schools can deny re-admission in the next school year or semester, withhold grades, certificates, diplomas or other credentials and clearances, and resort to court action.

While these look reasonable on paper, these will only come after the fact that the schools would have already fallen short in their own obligations. Teacher and employee salaries and benefits, utility bills, rent, as well as other expenses — all these require available funds from timely collection of tuition fees.

Should private schools renege on their obligations on account of late payments? Because in the absence of effective means to collect, or any compulsion to ensure prompt payment, one can almost be certain that parents and students will give less importance to payment due dates.

Perhaps a more proactive means of ensuring that school operations will not be disrupted should be used should the “no permit, no exam” policy become a law.

It is certainly unfair to have reactive measures imposed and leave private schools with no cash to pay for operational expenses that had already been incurred.

Disruptions in cash flow can easily push the small and medium private schools over the edge and may cause many to close their doors permanently.

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The question is… will legislators be open to weighing the repercussions of their proposed laws with thorough consultations with all affected stakeholders? Abangan!

— Daxim L. Lucas
TAGS: Biz Buzz, Business

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