Parents turn to buy now, pay later schemes to meet Australia’s soaring school costs

<span>Photograph: Dean Lewins/AAP</span>
Photograph: Dean Lewins/AAP

Parents struggling to afford ballooning school costs are increasingly turning to buy now, pay later providers, and advocates say there needs to be more support from schools to avoid families falling into debt.

Dianne Giblin, the chief executive of the Australian Council of State School Organisations, said an increasing number of families say they have used buy now, pay later to afford school items as the cost of public education blows “out of proportion”.

The amount of parents seeking loans for school costs such as uniforms, books, stationery and computers grew by more than 130% from 2018 to 2022, with the average loan being $1,150, NAB said last week.

Related: Cost-of-living crisis drives vulnerable Australians to buy now, pay later schemes, consumer groups say

One of these parents is Laura Ireland, whose child attends a school in Victoria. She said she spent last week figuring out how she was going to afford to buy her daughter a $700 laptop and ended up resorting to Afterpay.

“I was grateful it was an option, but in saying that I’m not going to be grateful when I get my first couple of pays for the year and that money is being taken out and there’s like $2 in my bank account,” she said.

Ireland purchased the laptop using Afterpay after she received a letter from the school saying there was a limited number of school laptops, so children who didn’t have one would likely have to share.

“There was no ‘if you’re having financial difficulty give us a call and we can give you some options’,” she said. “I then felt like my child would stand out if they didn’t have what everyone else has.”

Jenny Davidson, the chief executive of the Council of Single Mothers and their Children, which supports those in its network struggling with back-to-school costs, said this was an issue the organisation often heard about.

“Some schools aren’t doing a good job of understanding what it means to be in financial hardship,” she said. “Some schools are better than others, and I think schools with more disadvantaged students manage this better, but the reality is that we are a long, long way from education being free in Australia.”

Davidson said that parents did not always feel comfortable asking for assistance and sometimes opt to take on debt as the easier path forward.

“The best-case scenario is that parents take out a no-interest loan, but too often it’s a buy now, pay later purchase or a payday loan.”

But part of the problem, Giblin said, was that financial hardship support had not kept pace with the rising costs of sending a child to school.

According to a report by Futurity Investment Group, the cost of putting a child through a government school could reach $87,528 up to year 12. The cost was highest in Melbourne, where it could reach $102,807.

Last week NAB reported an increasing number of Australians were expected to seek its no interest loans, offered in partnership with the charity Good Shepherd, as a result of the rising cost of living.

This cost burden has also extended to school fees for some which are voluntary at government schools.

One mother told Guardian Australia she felt pressured last year by her school to pay fees for her two children. She used her credit card and said she was still paying it off.

“The school sent emails repeatedly saying only a small portion of parents have not paid. Then they send home the invoice with the kids, then the teachers also remind you to pay, and the teachers tell the kids to tell you,” she said.

According to a recent Consumer Policy Research Centre survey of Victorians, parents with buy now, pay later debt reported missing payments or asking for payment assistance at double the rate of those without children.

Victoria’s minister for education, Natalie Hutchins, said the policy on parent payments was “very clear”.

“Each contribution must be voluntary. No parent or carer should be pressured in any way to make voluntary parent contributions.”

She also added that the state had programs to make sending children to school cheaper, particularly in recognition of rising cost-of-living pressures. This included discounted uniforms or glasses, subsidised school excursions, tutors in classrooms, and free breakfasts.