Citing anonymous sources, The Sunday Age led yesterday with the story that the GFC may cause some private schools to close.

Reference to a company offering fee insurance to parents and schools raises suspicions that, like regular ‘news’ from the Australian Scholarships Group about total school costs (running again in a parallel story yesterday), this story has more to do with clever manipulation of the media by commercial interests and (yet another) slow news Sunday than reporting on real information.

Neverthless, the possibility is real. While the experience of the last recession would suggest that total private school enrolment growth will slow rather than go into reverse, that is across the whole sector, and consistent with individual schools suffering enrolment declines.

Because schools are non-profits often operating on a quasi-charitable basis, many are likely to start the recession under-capitalised and lacking strong trading surpluses. This leaves them vulnerable to a downturn. In the the last recession the number of non-government schools did in fact decrease, from 2,517 in 1990 to 2,499 in 1993.

However, as with enrolments this was a cyclical rather than a structural change. Private school numbers recovered to 2,520 in 1994, and there were 2,728 private schools in 2007. If this is as severe a recession as forecast, I expect we will see a similar dip in numbers and subsequent increase as the economy improves.

Update: After months of stories on the claimed shift to public education, the SMH grudgingly concedes it is not true:

INDEPENDENT schools in NSW have reported an overall increase in enrolments this year, despite having bled some students to the public school system.