Private schools in the New Orleans area offer parents school tuition

Private schools in the New Orleans area offer parents school tuition

Greg LaRose

Scores of private schools in the New Orleans area have stopped collecting tuition from students’ parents – allowing a bank to handle the responsibility instead.

First Bank and Trust of New Orleans is trying to corner the market on tuition loans for private preschool, elementary and secondary education. Millicent Jones, manager of FBT’s Education Division, said the bank provides tuition loans to more than 100 schools and 16,000 families throughout the New Orleans area, Baton Rouge, Lafayette and the Mississippi Gulf Coast.

It’s very hard to walk up to a family, especially those with more than one child in school, and say ‘I need all of the tuition July 1,’ said Jones. Our tuition program allows families to budget their tuition over a 10-month, 11-month or 12-month period of time, which makes it easier for them to handle that big-ticket item.

Whitney Bank is also a player in the tuition loan field albeit a minor one with about 10 schools, said Greg Johnson, credit product manager.

It’s not a very large line of business for us, but it’s a line we got into in order to service some of the customers of the bank, said Johnson.

Ashton Ryan, CEO and president of FBT, said tuition lending makes up nearly 17 percent of individual bank loans. The Federal Deposit Insurance Corp. listed $210 million in individual loans for FBT last year. Ryan said the bank expects the tuition program to account for about $63 million in loans this year.

Jones said FBT works with individual schools to set interest rates for parents taking out tuition loans. Rates, which vary from school to school, generally fall below 10 percent, Jones said.

Charles Maumus, St. Martin’s director of admission and financial aid, said the loans make private school costs more manageable.

It helps families with cash flow on a monthly basis, Maumus said. That’s how most families live – monthly. They can’t cough up the large percentage of tuition all at once.

Maumus said about 12 percent of St. Martin’s 800 students use FBT tuition loans. Tuition ranges from $8,700 to $14,350 for St. Martin’s pre-kindergarten through high-school classes.

Jones said benefits include having tuition collection handled off- campus for participating schools. FBT employs 13 customer service personnel, collectors and couriers.

We save the school money on hiring people to run their accounts receivables, collections or any other ancillary department they need to get the bills out, Jones said. These administrators can focus on the growth and development of the young person – not chasing down tuition.

It frees me up to do other parts of my job by having the bank be the collector and send out the notices, said Patty Grantham, financial secretary for Calvary Baptist School in New Orleans. I just have to come in at the very end if somebody’s not responding to the bank.

All tuition payment records from FBT can be accessed over the Internet.

Grantham estimates 35 percent of the parents at Calvary use loans to pay tuition of more than $3,000 per year. About 190 students attend the pre-kindergarten through third-grade school.

Jones said competition for tuition loan services tends to be locally driven, noting that banks in Mississippi are also serving the area where FBT is expanding along the Gulf Coast.

There are also national players involved. Louise S. McGehee, an all-girls school in New Orleans with grades pre-k through 12th, offers tuition loans through Key Education Resources, a subsidiary of Cleveland-based Key Corp.

Key, a publicly traded financial services company, has a retail banking presence in 12 states and listed $90.2 billion in assets on March 31.

Sarah Smith, McGehee director of admissions, said Key’s program has a $135 initiation fee and parents make payments over a 10-month period. Key also offers loans covering more than one school year with repayment periods of up to 10 years.

Annual tuition at McGehee ranges from $8,900 for its pre-k program to $13,100 for high school. Smith did not disclose what percentage of the school’s 490 students used loans.

Ryan said FBT has working relationships with about 80 percent of the 56 Catholic schools in the New Orleans area. Tuition programs are set up at each individual school, not through the Archdiocese of New Orleans, said Ryan.

The New Orleans Catholic school system is the 12th-largest in the country with approximately 50,000 students.

Ryan wants to expand FBT’s tuition loan service to the Archdiocese of Miami, where there are 38,000 students in 73 schools.

We think tuition’s a natural for the Miami market because of its size and its high Catholic orientation, said Ryan.

Ryan said he first wants to establish a physical presence in south Florida but Banco Popular of Puerto Rico outbid FBT earlier this year for Miami Lakes-based Kislak National Bank. Ryan did not disclose FBT’s bid but Banco Popular’s offer for Kislak was $158 million, according to the Miami Herald.

Copyright 2005 Dolan Media Newswires

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