Egyptian middle classes fear tuition fee increases after pound float

Passant Darwish , Monday 14 Nov 2016

Not everyone who sends their child to an international school or college is rich, say Egyptian parents and students who are worried the depreciation of the Egyptian pound will affect tuition fees

AUC protests
Students protesting against the automatic rise in tuition fees after the government floated the Egyptian pound in the American University in Cairo on Thursday. (Photo: Haleem El-sharani)

Students at the American University in Cairo (AUC) staged a strike on Monday for the eight day running to protest a rise in tuition fees after the government floated the Egyptian pound—a crisis extending to students in dozens of other international colleges and schools who pay tuition at a rate pegged to the dollar or other foreign currencies.

Earlier this month, the Central Bank of Egypt floated the Egyptian pound in efforts to combat an economic crisis and a shortage in hard currency. The pound, previously valued at a fixed rate of 8.88 to the dollar, has of Monday reached an average rate of 15.5 to the dollar.

The Egyptian cabinet has taken a number of decisions to ease possible inflationary effects that might hit the poor, such as increasing the purchasing power of subsidised food cards, but they don’t extend to the middle and upper middle classes.

“I’m not American, I won’t pay the tuition in dollars again,” chanted AUC students after storming out of a forum on Wednesday with the university’s newly inaugurated president, Francis Ricciardone, a former US ambassador to Egypt.

AUC students pay half their tuition fees in Egyptian pounds and half calculated in dollars, but they can pay the dollar amount in the equivalent in EGP, a decision that was implemented less than two years ago when a forex crunch began to hit the country. Previously, the students’ fees were only expressed in Egyptian pounds.

Ricciardone offered the “reaffirming news” that the 2016 autumn semester’s final installment will be paid at the old exchange rate of EGP 8.88 to the dollar, a decision that will cost the university around a million dollars, according to the president.

However, the university's president said his administration and board of trustees still don’t have a solution for next semester’s tuition fees or for subsequent years.

Ricciardone also said that the board of trustees is discussing an inflationary adjustment in January for staff wages, which are paid entirely in Egyptian pounds, as the university's gardeners, cleaners and security guards “are suffering from a loss of purchasing power.”

“We will find a way forward so we won’t lose students...We are in the real world of Egypt, we are in the world of inflationary impact,” Ricciardone told a packed auditorium of angry students.

The students’ main demand is that the university abandon the decision to calculate tuition fees in dollars. They are also calling for greater transparency regarding the budget.

“My father doesn’t have to beg in the streets to pay [my tuition fees],” AUC Student Union President Amr El-Alfy told Ahram Online.

“We’re upper middle class; our class is being erased in Egypt, we’re being squeezed. It is a disaster that the economic crisis is affecting us this way; how will it affect the lower classes?” El-Alfy added, while dozens of students gathered outside the administration building chanted “my father is not a thief,” and “whoever is silent, why are you silent, is your father a thief or what?”

AUC students said they would continue striking until their demands are met. Since Thursday, some professors have been holding their classes outside where the protests were held in a show of solidarity, while others have cancelled classes altogether.

Meanwhile, the AUC president sent a university-wide email on Thursday saying the administration will have a better sense of the appropriate measures to take in light of the pound flotation and its impacts by the middle of December.

Uncertainties still loom for the students of other private universities, including the British University in Egypt and the German University in Cairo, who fear a spike in their own tuition fees. According to state statistics body CAPMAS, 2.3 million students were enrolled in both private and public universities in the academic year 2012/2013; of these students, 22,000 are enrolled in more than 20 private universities.

The annual fees in these universities range from 10,000 pounds to over 100,000 pounds, depending on the university's ranking and the student's major. The fees of some of these universities are defined in dollars or Euros, and would therefore likely be affected by the pound's loss of value.
'We're not all millionaires'
It's not just students at private universities who are worried about the pound's depreciation. Many families in Egypt's middle class send their children to private schools which also peg their fee rate to hard currencies, and they say that despite the stereotype that the international schools are only for the rich, they too are feeling the pinch.
“I’m from the middle class,” Doaa Sultan, a mother of two children attending a German school told Ahram Online. “The education of my children is one of the priorities of my life; [their] education is more important than my food. I can stop buying them new clothes as long as I provide them with decent education.”

Sultan added that she sends her children to international schools because it isn't their fault that they were born in Egypt, where educational quality is lacking.

Egypt’s primary-level education, which spans a period of six years, was ranked second-to-last worldwide – standing at number 139 – by the World Economic Forum’s Global Competitiveness Report for the year 2015-2016.

According to the Ministry of Education about 20 million students were enrolled in schools around Egypt in the year 2015/2016. Fewer than 2 million of those go to private schools.

In addition to some 52,000 public schools across Egypt, the Arab world's most populous country is estimated to have over 7,000 private schools, over a hundred of which are described as American or international schools.

Yearly tuition fees in private schools range from less than EGP 1,000 (approximately $85) and up to a whopping $12,000 for American and international schools.

Sultan says she and her husband, whose incomes are fixed and in Egyptian pounds, don’t want to take their kids out of school and don’t have any alternative to paying the tuition fees next year, which are expressed in Euros and paid in their EGP equivalent.

“There has to be cooperation from the school with us. Not everyone who enrolls their kids in international schools is a millionaire. We are a normal middle class [family],” she concludes.

Parents like Sultan have good reason to be worried. The deputy head of the Owners of Private Schools Society Badawy Allam told Al-Shorouk daily that private schools will demand from the education ministry that they be allowed to increase their tuition fees between 15 and 20 percent next year to accommodate a number of rising costs.

Allam said the schools will also demand an increase in bus fees starting this year, after petroleum prices were increased on the same day the pound was floated.
The ministry has yet to decide on an increase for private school fees next year.
In September, two months prior to the pound float, it set the annual tuition fee increase rate for private schools for the next five years, and the increase rates, which apply from the 2016/2017 academic year, are between 3 and 11 percent annually, depending on the size of the tuition fees.

In 2015, the Global Wealth Report of the Credit Suisse Research Institute estimated the size of the Egyptian middle class at 5 percent, indicating that it had dropped by 48.2 percent between 2000 and 2015.

A similar study by the World Bank published in 2016 similar estimates that the middle class in Egypt had shrunk by 14.3 percent in the first half of the 2000s, falling to 9.8 percent in 2010.

The World Bank study described the middle class as those who are “reasonably secure from falling into poverty,” and included individuals who earned $4.90 per day in 2005. The study described Egypt as a country with stronger downward than upward mobility.

Egypt’s recent economic measures have been hailed by the International Monetary Fund, the World Bank and the United States.

The reforms are part of an effort which secured the IMF board's approval for a $12 billion loan package to be delivered over three years. They also aim to decrease the budget deficit, which currently stands at 12.2 percent of GDP, to less than 10 percent.
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