How can they do this?

33055

Wed, Mar 22 2017, 6:29 pm

amother wrote:

Hi. We love in cherry hill and we love it here. The elementary school is apprx 10k (if you pay upfront) or 13k spread out. There are options for scholarships but they are not particularly easy to get. Lmk if you have other questions

Amother wrote this in another thread.

How do they get around ribis?

skee

Wed, Mar 22 2017, 6:34 pm

Squishy wrote:

Amother wrote this in another thread.

How do they get around ribis?

I believe ribis only applies when repaying money that was lent. Not to charging extra for paying later.

33055

Wed, Mar 22 2017, 6:47 pm

skee wrote:

I believe ribis only applies when repaying money that was lent. Not to charging extra for paying later.

I was told that the school I sent to couldn't do this because it is ribis. You can't discount for playing up front because then those that pay later would be being charged interest.

amother

Taupe

Wed, Mar 22 2017, 7:05 pm

I believe it is an issue of ribbis as well.

I don't know how they got around it. But probably in a similar manner to the magazine subscription. Paying a year upfront is less than buying week by week. I know people spoke to the magazine companies about it and they gave some sort of reasoning why it's ok.
Though I know people who will not pay upfront due to this.

amother

Taupe

Wed, Mar 22 2017, 7:14 pm

Actually I think I may be wrong.
this is what it says in 'The Laws of Ribbis' by R Reisman.
" It is common for hotels, schools and day camps to offer advance payment discounts. These 'early bird specials' offer savings for people who register in advance. When only a deposit is required to secure these low rates, this type of discounting is permitted. However when the discount is available only to those who pay a substantial portion of the fees (or tuition) in advance, this practice is highly questionable and should be avoided.
Today, virtually all hotels, schools, and day camps are set up as corporations. According to the view of Igros Moshe, corporations are not bound by the prohibitions of paying ribbis. They would therefore be permitted to offer these discounts. This is not true according to the poskim who dispute the leniency of Igros Moshe."

doctorima

Wed, Mar 22 2017, 8:54 pm

Ribbis does not only apply in cases of repaying loans. I learned that while it's forbidden to charge more to somebody who pays later, it is allowed to give a discount to somebody who pays earlier. In other words, if the real tuition is 10k, they're not allowed to charge 13k to people who spread it out. But if the real tuition is 13k, it's permissible to give a discount to people who pay it all up front and only charge them 10k.

amother

Beige

Wed, Mar 22 2017, 9:40 pm

If you play upfront, the school has a better cash flow and lower interest on its line of credit. So they pass along the lower cost to parents who pay upfront. If you pay over time, you cost the school money in interest, and they pass the increased costs onto you.

ETA: so there's no issue here of interest. The cost to you changes depending on the cost to the school.

hillary

Wed, May 03 2017, 2:06 pm

If they give you both prices at the outset, one form prepayment and one for late payment, it would be ribbis.
Better cash flow means that cash up front is worth money to them. That is the definition of Ribbis.
Newspapers need subscribers to attract advertisers, not just for cash up front.

scrltfr

Wed, May 03 2017, 2:22 pm

What is the issue even dry cleaners do this. If you pay up front you get . You know it costs money to manage payment plans. It costs the school extra time so why can't they charge more?

sky

Wed, May 03 2017, 2:38 pm

I think a discount upfront is allowed.
Our registration gets 50 off if it is in on time.
I think they can give you off for being early.
They can't charge you more for being late.
Teh wording has a lot to do with it.

ra_mom

Wed, May 03 2017, 2:42 pm

It's not ribis. It's $13k annual tuition, with a pay up front special, aka a discount, not interest. What's wrong with that? I try to take advantage of an early bird special at our kids' day camp each year.

hillary

Fri, May 05 2017, 1:18 pm

The money it costs to manage payment plans is because in the outside world it costs money to borrow money. Our Torah forbids that. To say that you pay extra later because they want to not have to borrow money on interest earlier is essentially paying ribbis for your money.
Dry cleaners, if they are not Jewish, may charge ribbis. Jewish camps may not.