Private schools are feeling the post-float squeeze: While the central bank’s decision to float the EGP last month has been a boon for the economy, boosting FX liquidity and reigniting investor confidence, it also means that many businesses around the country — particularly those with FX expenditures — now face elevated costs. With a cap on how much they can raise tuition fees and teacher salaries paid in FX, many private and international schools are finding themselves in a bind. We spoke with several education sector veterans to find out how these schools have been impacted and how they are navigating the post-float environment.

Costs are on the rise: The float will cause schools to incur “huge losses” amid high operating costs and demands for salary increases, Private School Owners Association Deputy Chairman Badawy Allam told Enterprise. British International College of Cairo CEO and member of the Senate Ahmed Samir Zakaria told us that costs are also set to increase as fuel price hikes introduced two weeks ago drive up the expenses of school buses and school activities.

Schools knew this was coming: International school El Alsson had penciled in the EGP at 40 to the greenback when it calculated its budget for the 2023-24 academic year, the school’s executive director Karim Rogers told Enterprise.

There isn’t much room for tuition increases: Private and international schools under the purview of the Education Ministry that charge fees of EGP 35k and above are not allowed to hike fees by more than 6% for the current academic year. Schools outside of the ministry’s oversight — among them institutions owned by associations and other bodies, like CAC, MBIS, and BISC — are not impacted by the caps.

But, negotiations are underway: School operators are currently in talks with the government to raise the limit on tuition fee hikes, which has seen schools taking the financial hit on behalf of parents over the past years, Zakaria said, adding that they are seeking to at least double the limit. In the meantime, the Private School Owners Association will conduct a study to decide on what it sees as a more suitable fee increase, with plans to submit a formal proposal to the Education Ministry at a later stage.

There’s a good chance that the cap could be eased for the next academic year: Following the completion of high school exams, the Education Ministry will examine requests from schools regarding increased expenses, a ministry source told Enterprise. We may witness “an exceptional increase in favor of private and international schools, but the matter will be subject to a study first,” the source said.

It might not be enough: “Tuition fees will have to be increased for the 2024-25 academic year, but this [increase] still cannot meet the huge rise of costs due to the new, fluctuating exchange rate. Schools have to be creative in coming up with new ways to cut expenses and not affect the quality of education,” Malvern College CEO Azza El Sherbiny told Enterprise.

Passing costs onto parents: Not only are parents likely to see tuition fees for the 2024-2025 academic year rise, but also non-educational expenses from uniforms to school transportation, food, materials and after school activities are on track to rise. “It’s not desirable and we’re trying to be conscious of parents, but it’s a catch-22 situation,” Rogers told us.

Schools have rolled out financing mechanisms, including loans and installment programs — to help parents cope with rising costs following a directive from the Education Ministry that came into effect at the beginning of academic year 2023-24, Zakaria said, adding that he expects to see an increase in the number of parents seeking these financial tools.

Foreign teachers still see some of their salary in FX: Most private and international schools pay foreign teachers a split salary — 25% of their salary is paid in FX and the rest is paid in local currency, Rogers told Enterprise. The FX portion of the salary is not pegged to the exchange rate, “meaning we’re being hit [by the EGP depreciation] all year round,” Rogers added.

But, this may change: Split salaries will have to change and there won’t be a large foreign currency percentage included, as schools can no longer afford it, El Sherbiny told Enterprise.

Expat teachers are frustrated: Foreign teachers in Egypt have been hit by the float on top of facing FX spending limits on Egyptian bank accounts. They have their own payments to make, not just Netflix accounts, but for mortgages, student loans, ins., and pensions, Rogers said.

And many have already left: An exodus of foreign teachers to the Gulf has already started and it is difficult for Egyptian schools to be competitive under the current circumstances, El Sherbiny told us.

It’s been a tough year for recruiting: “We attended two recruitment fairs in January and it was a very competitive year. After the currency float in March, we couldn’t do it. It was ridiculous to the extent that we were offering [the equivalent of] say USD 40-48k a year, and then overnight it went down to USD 25k,” Rogers said.

International schools are looking more at Egyptian staff: Schools are trying to attract the best local teachers and Egyptian teachers understand that there is a greater demand for highly qualified, local teachers and are beginning to request high salaries (although still in EGP) in response, El Sherbiny said.

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