Paying school fees is a real strain on parents who pay a sizeable amount of their earnings every trimester for their children’s education. As a consequence of this, schools dedicated to serving low-income communities like PEAS schools, need to find ways to cope with inconsistent payments and unpredictable income.

In 2017, UNCDF MM4P partnered with PEAS Schools in Uganda to investigate how digital finance can help alleviate the school fees payment issues for parents, schools and students. Among others, one of the concepts we set out to explore was “Pay As You Learn” (PAYL) as a payment model for schools in Uganda.

PAYL originates from the “Pay per Use” pricing model, which proved to solve the affordability puzzle in serving low income markets. People want to consume goods and services, but they can only do so in small bits; in line with their income and cashflow. The retail sector across Africa was the first to understand this and started to provide goods in the smallest possible quantities; selling 100 grams of salt or sugar, a quarter litre of kerosene etc.

The mobile telecom sector in Africa has also managed to penetrate the lowest income segments by moving from a subscription-based pricing model to a prepaid or “Pay as you Go” model. Bob Collymore, CEO of Safaricom, attributes the success of the company to understanding Kenya’s “Kidogo economy” (micro nature of the economy). The same model is behind the success of PayGo Solar in East Africa.

What we learnt from the field

UNCDF MM4P talked to parents and caretakers, school administrators, teachers and students across PEAS schools Uganda, in the Eastern, Western and Central regions. The research included findings on the pain points around school fees, the payment process, the coping mechanisms deployed to tackle these issues, and lastly a brainstorm with the stakeholders about the possible innovative solutions to these challenges.

Some of the key insights that stood out are:

• School fees are a top priority for most parents. But given the many competing needs, income has to be spread across several expenditure baskets.

• There is a significant timing mismatch between the major income inflow (agriculture harvest period) and the school fees payment period. Some parents try to overcome this by saving up for this at village or cooperative savings and credit groups.

• Not making school fee payments is not just caused by low “capacity to pay”, but also in a good number of cases due to “low willingness to pay”, especially in communities where education is not taken in high regard.

• Where it makes financial sense, parents naturally adopt the usage of mobile money to pay fees. This mainly applies to parents living far from the school and who would have to pay transport costs to reach the school.

• For uptake of digital payments of school to grow, a reduction in transaction fees (or no fees at all) is needed as well as an increase in digital literacy.

Because parents are struggling to pay fees, for all the reasons mentioned above, PEAS schools have come to accept payment in instalment. School directors, aware of the mix between capacity and willingness to pay, have devised various ways to get parents to fully pay up due fees; from sensitisation and persuasion to coercion.

Can “Pay as you Learn” tackle the affordability puzzle in education?

PAYL in its strict sense of “metered attendance of school in line with amount paid” was not welcomed by parents and caretakers nor the schools and students. Below some excerpts of what people said:

Parents and caretakers mentioned that:

- “Flexibility in payment is good, but within limits. Much as we are not capable of fully paying up the fees, we are cognisant of the fact that the school needs a good sum of the money upfront to be able to function properly.”

- “I prefer to offload the better part of the payment obligation as early as possible, and then struggle to pay the balance slowly through the term”.

- “Education is so important that you can’t pay as you wish, like airtime” – this can lead to children missing school when I fail to pay for some days”. “I prefer negotiating with the school to keep my child in school and allow me to pay when I get the money.”

The school mentioned that:

- “This would severely distort the learning process in most of our schools given the types of communities we deal with. It would give those parents who are not very keen on education the leeway to keep their children home to support them in the gardens.”

- “Imagine if students come to school in bits, depending on when parents have the money, no student would cover the full syllabus, the school would fail in its teaching obligation.”

What might work?

Clearly this focus group of PEAS parents found education very important and would not lend itself to a “metered consumption” or Pay as You Learn type of model.

Consensus did emerge about the solution to the affordability puzzle: “restrained flexibility” in school fees payments. On one hand, schools are open to payments in instalments, but within an agreed structure for better cash flow management. On the other hand, parents are open to a structured payment plan, which can serve as a push or target for them to achieve, but still require the school to be lenient if there is a strong case for a parent to not comply with their payment plan.

In the coming months and with support from UNCDF, PEAS schools in Uganda are digitising school fee payments and piloting these flexible payment plans. This pilot will be tested from April to August in 15 schools, impacting around 1500 pupils. Their school fees will be paid digitally, whereby parents can choose a specific payment plan at the start of the term. Parents would still have the option to seek approval from the school director in case they are unable to meet their selected plan.