Even the Posh Are Feeling the Pinch

A top private schools, financial aid is suddenly a pressing concern, and perks like rugby trips abroad are ending

By Josh Goodman

It's not Eton or Harrow. But the immaculately mowed rugby fields and Tudor-styled boarding houses make St. George's College seem a world apart from the chaos that prevails beyond its ivy-covered walls. For over a century, this elite, bilingual prep school located on the outskirts of Buenos Aires has been the grooming school for the sons and, more recently, daughters of Argentina's clannish upper class. Among the old Georgians' network of alumni are the country's leading bankers, businessmen and industrials--politicians are mostly of public school pedigree--and at least one former ex-pat known well beyond Argentina's borders: former Citibank Chairman John Reed, who studied at St. George's when his businessman father was posted here in the 1950s.

For the 650 well-heeled kids that currently attend St. George's, it's a cushy life. But with Argentina's economic crisis pushing 8,000 people a day into poverty, it's also increasingly fragile. The 33-hectare campus that used to lie at the heart of Argentina's large Anglo-Argentine community is now surrounded by a mushrooming shantytown, making the five blocks that separate the highway from the school's guarded entryway a sometimes-perilous journey. Nor are the signs of decay strictly external. Enrollment this year is down about 5% for the first time in a decade. The second floor of a modern student center remains half-built, its exposed concrete pillars an eyesore in a place where appearances matter. Meanwhile, rugby tours of Africa and other traditional perks are being reconsidered for fear parents can't come up with the extra cash. "It's taking more and more work every year to finance the school without sacrificing the quality of our education," says Martin Gibson, the school business manager. "But I worry that this is only the beginning of worse things to come."

For some of St. George's equally upscale rivals, worse things are here. Since its creation after World War I by a British-born governess, Northlands School has been the finishing school of choice for the privileged daughters of Argentina's would-be aristocracy. Now, despite a 12% cut in salaries last year, teachers complain of being paid up to six weeks late. Contracts with native English-speaking teachers brought in from abroad aren't being renewed. And for the first time ever, the school organized a book fair to sell used textbooks and school supplies in order to assist cash-strapped parents. For a school that before January's devaluation charged $10,000 a year (it's now just below $5,000), such cost-cutting amounts to an act of desperation.

To be sure, with Argentina's poverty rate surging from 15% to 45% in less than a decade, there are worse fates to bemoan than those of the upper class. But the fact that Northlands and St. George's are feeling the pinch is a sign of how deep Argentina's wounds are.

During previous crises, schools like Northlands were barely affected. Quite the contrary: The hyperinflation that destroyed so much of the salaried class's savings in the late 1980's was a bonanza for these institutions, which were able to keep tuitions, collected at the start of each month, on par with inflation, invest the difference in short-term CDs, and pay out salaries at the end of the month with the interest earned. The sophisticated scheme worked because the parents they catered to were immune from the ups and downs of the business cycle, even as violent as they tend to be in Argentina.

But these days, the notion that a job in daddy's company is assured, even if the rest of the economy is in tatters, is suffering a quick death. Although enrollment has barely budged from a year ago at Northlands, there are 100 fewer students than there were a decade ago, despite the addition of boys and a second campus. Meanwhile, in the absence of an endowment, the school has been dipping into its savings to provide aid to an alarmingly high number of families. Nearly 25% of families today receive some sort of assistance, and the school devotes a full 14% of its resources to aid, up from 6% a few years ago. "For a long time, financial aid was handled on a case-by-case basis, something afforded to families of long tradition who were going through a rough moment," says Jane Beller, chairman of Northlands' board of governors. "It was never anything systematic."

Given the pressures facing even wealthy families, an expensive education, far from being the birthright it once was, must compete against more mundane expenditures, like the car payment or mortgage. School administrators complain that a growing number are financially overextended--and leaving the schools holding the bag. In Buenos Aires province, where both Northlands and St. George's are located, schools are prohibited from expelling students once classes have begun, meaning that payment of just the first month of tuition assures a free ride for the academic year. As a result, St. George's and Northlands have put aside their traditional rivalry and started sharing financial information about parents seeking to transfer children between schools. And the schools have taken even more drastic measures: a slew of lawsuits against heavily indebted parents may force them to surrender expensive homes and cars.

Lower-echelon private schools are getting hit even harder. At the end of last year, private school enrollment in the capital, where traditionally 50% of kids attend private school, had fallen by 6% since the recession began four years ago, putting a greater strain on the already overburdened public school system. And with 45% of families this year behind in tuition payments, according to the Association of Argentine Private Educational Institutions, a record number of schools are expected to close. The squeeze at some schools, including San Tarsicio in the posh Barrio Norte, is so bad that in lieu of tuition, devoted parents have started sweeping halls, repairing door hinges, and performing other odd jobs to keep their kids' school running in the absence of cash flow.

At many schools, the very safety of their students has become a concern as Argentina teeters on the edge of anarchy. In recent weeks, accounts of retired politicians being chased out of shopping malls or physically abused by vigilante groups have become commonplace. Meanwhile, newspapers have been filled with stories of shop owners admitting to storing rifles behind cash registers to ward off would-be looters.

Wary of the trend toward violence, schools are spending less on items like textbooks and computers and more on security. At least that's the case at St. Andrew's, the oldest of Argentina's prep schools, founded in 1838, well before the country had a constitution. The school was forced to double its security budget this year after several students were mugged in the tree-lined suburban streets adjacent to the campus on the shores of the River Plate. But even that wasn't enough to stop a few parents from posting private bodyguards outside school gates while their children are in class. Such precautions haven't been seen since the 1970s when politically motivated kidnappings were commonplace. "It's something I thought we'd never see again, but obviously parents have long memories and aren't willing to take any risks," says Adrian Orti, St. Andrew's manager.

Most distressing for parents and administrators alike is the worry that a superb education may no longer be worth its price--at least not in Argentina. Orti, who like most Argentines traces his roots to Europe, says that despite the success he and his fellow graduates have achieved, he's encouraging his three children, all of them St. Andrew's grads as well, to begin their careers abroad--and they're listening. "We've become a breeding ground for the development of the rest of the world," he says. And he wonders if his country's best and brightest will ever return.

Goodman covers economics and politics from Buenos Aires

Edited by Harry Maurer

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