Can a school district be subject to usury laws?

[Proejo]

What is the name of your state (only U.S. law)? Texas

The school district where my child attends school has an extended care program for "after school" instruction and activities. This is for grades K-5.

The program allows a one-time payment of $1550 or weekly payments of $70 a week, totaling $2660. That is a net effective interest rate of greater than 55%.

The effect is to penalize those who can least afford the service. Is this legal? It appears on the surface to be a form of loan sharking.

 

[swalsh411]

Considering that they are not loaning you money I don't see how usury has anything to do with it. Rather, you are paying for a service as you receive it.

It is not illegal to offer a prepayment discount, even a substantial one, which is all this is.

 

[Proejo]

Granted, it's not a loan. It has the same net effect, though. At the same time, if the cost of the program is actually $1550 to cover the yearly costs, then wouldn't the extra $1110 be viewed as profit and as a non-profit organization doesn't this go against their charter? Consider 30 schools X 30 kids X $1110 and that's almost $1,000,000 in profits from those parents who can least afford it. Seems mercenary and predatory.

 

[Mass_Shyster]

Granted, it's not a loan. It has the same net effect, though. At the same time, if the cost of the program is actually $1550 to cover the yearly costs, then wouldn't the extra $1110 be viewed as profit and as a non-profit organization doesn't this go against their charter? Consider 30 schools X 30 kids X $1110 and that's almost $1,000,000 in profits from those parents who can least afford it. Seems mercenary and predatory.

What are the expenses involved in chasing down 30 kids each week for payment? What do you do if nobody has paid for junior and he shows up anyway? You can't just send him away. How do they plan for the week that 10 kids all take off?

There are plenty of good reasons for offering a substantial discount for prepayment.

 

[justalayman]

Granted, it's not a loan. It has the same net effect, though. At the same time, if the cost of the program is actually $1550 to cover the yearly costs, then wouldn't the extra $1110 be viewed as profit and as a non-profit organization doesn't this go against their charter? Consider 30 schools X 30 kids X $1110 and that's almost $1,000,000 in profits from those parents who can least afford it. Seems mercenary and predatory.

well, maybe the parents that cannot pay the $1550 all at once should get an actual loan. Even if they paid 15% APR they will come out way ahead.

and trying to be that simplistic concerning a non for profit isn't going to work. You are trying to look at one small accounting entry and extrapolate that into them being a for profit business. Doesn't work.

Besides, they just split that money between the top 4 directors/employees so it isn't profit then

 

[FlyingRon]

The other question is it really a payment plan or are the parents free to withdraw the children at any time when on the month-to-month? Committing for a full year offers advantages to the school where staffing and other resources come to play that can more than justify the difference as well.

If the school district, it's not a "non-profit"

Further, they don't have to demonstrate that every single service they offer is operated at no net gain. Things don't work that way.