The pension law and the increase in tuition fees in private schools

• The lack of clarity about the scope of the regulation and the lack of knowledge of its impact by representatives is counterproductive for Venezuelan education because, according to experts consulted by The newspaperthe contribution represents an increase in the financial burden for families

Mariana*, a representative of a third grade student at a private school in Caracas, was verbally notified that, in addition to the monthly payment she owed for the school period, she had to pay an additional 4 dollars for each outstanding payment due to the Pension Protection Act.

The announcement meant that Mariana had to plan a new budget. She agreed despite her doubts, but she did not stop thinking about the parents who have two or three children enrolled in the educational institution and who must assume this new financial burden.

Martha* had a different scenario. At school she was informed that the administration would assume the amount related to the Pension Protection Act, which came into force on May 8, 2024However, she was told that this will be a temporary measure until September, as she was told, while the school modifies its cost structure for the new school year.

The representative explained that for the start of her daughter’s classes (September) she must pay 65 dollars just for the monthly fee, when previously the amount was 50 dollars. That is why she believes that this increase, derived from the pension law that now weighs on private schools, will be counterproductive for her, taking into account the administrative costs of returning to the classroom.

In the case of the institution where Daniela*’s son studies, which is subsidized, the registration fee was agreed at 200 dollars. This amount includes a badge, payment control, advisory board and two months’ tuition, which was set at 50 dollars.

A subsidized institution
It is an educational establishment that receives funding from the State, but at the same time can charge a monthly fee for each student.

Daniela mentioned that the meeting raised the issue of adjusting costs to cover the new tax for pension protection. “They also said that the school is assuming additional support for teachers, in addition to their salaries and bonuses, although they did not specify the amount,” she added.

The representative expected a higher amount to cover the new tax on pension protection, as she anticipated that the regulations would require a higher contribution. However, she fears that the educational institution will be forced to break these agreements due to the tax burden.

Schools face improvisation and lack of clear information

Photo: Archive

The Special Pension Protection Law is a regulation to require the private sector to pay monthly up to 9% of its total payroll to a special fund to finance this public expenditure. On this point, an administrative employee of a private institution, who preferred to remain anonymous, said for The newspaper There is currently a lot of ignorance about how the pension law will begin to affect private educational institutions and union representatives.

The person said that the percentage, which corresponds to the regulations, is not included in the cost structure of the schools. In this regard, he stated that some educational institutions did not increase the fees during June, July and August, since they assumed the payment without having a financial source to cover it. However, he warned that educational representatives must adjust the prices in the new school year in order to continue surviving.

In his opinion, the contribution translates into a direct impact on the finances of the institutions, without offering a direct return for the improvement of the working conditions of the teaching staff or educational infrastructures.

“The reality is that private schools must make increases for the school year that begins in September 2024. But currently there is a lot of misinformation and some parents have not learned about this law,” said the worker.

Fausto Romeo, vice president of the National Association of Private Educational Institutes (Andiep), said in June 2024 in an interview for The newspaper that the monthly fees for private schools in Venezuela could increase by up to 6% due to this special contribution.

The representative explained that the academic institution must multiply the number of employees by the amount in dollars it receives, according to the rate of the Central Bank of Venezuela (BCV) and then divide that total by the number of students. The variation in costs will depend on the number of students.

Organizations demand exemption for the private education sector

Photo: Archive

Both Andiep and the National Federation of Parents and Representatives Societies (Fenasopadres) have made public statements to promote the exemption of this law and for it not to apply to private and subsidized schools.

Nancy Hernandez, founder of Fenasopadres, said for The newspaper It is crucial that the Venezuelan State consider an exemption for private educational institutions, given that these institutions operate as non-profit civil associations.

For Hernández, this means that school owners do not make any additional profit from their educational activity. In addition, in his opinion, the private education sector is already severely affected by the financial burdens imposed, which worsens the situation.

Who is exempt from the pension protection law? (box)

Official Gazette No. 42,881 establishes that enterprises registered with the National Registry of Enterprises (RNE) are exempt from paying the special contribution.

The representative stressed that private schools must present and register their operations with the educational zone under the risk of facing problems if they do not comply properly. The spokesperson also pointed out that this requirement may depend on the interpretation and disposition of the official in charge of the registry, which introduces a dose of arbitrariness and additional difficulty.

In his view, given the current economic context, it is essential that an exemption be promoted to alleviate the financial pressure on private schools and allow them to continue their educational work without the additional obstacles imposed by these regulations.

Hernández stressed that the cost of the law ends up falling on the Venezuelan family, because it ensures that the tax is transferred directly to the national treasury, without specifying how, when and in what way it will benefit the education sector.

“The proposal is very vague, with grey and dark spaces where it is not known where the money will end up or how the benefit for workers will be reduced,” Hernandez said.

The lack of clarity and irregularities in the process of socialization of this legislation, as the representative pointed out, raise serious concerns for the Venezuelan educational sector. The implementation of the tax would be counterproductive because, in her opinion, it would lead many parents to migrate from the private sector for economic reasons. In this sense, instead of benefiting the sector, Hernández concluded that the pension protection law translates into an increase in the financial burden that directly harms students and their families.

*Some names were replaced at the request of those interviewed.

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