Four Reasons to Rethink EdTech Financing

Expensive? Not fiscally responsible? Not even close.

GUEST COLUMN | by Mark Rand

CREDIT Diamon Assets.jpgWhen it comes to edtech purchases, many school districts avoid the F-word: financing. The thought is that financing technology purchases is expensive and not fiscally responsible.

Yet often these same school districts use various financing schemes to procure critical items such as buses and furniture, as well as equipment for offices, security, cafeterias and athletic facilities. Some districts even rent their buildings.

I’m not sure how technology financing became a dirty word with school boards, but it shouldn’t be. Smart financing of edtech purchases has many benefits for students and teachers, and may even cost less in the long run.

An iPad that cost a school $479 in 2010, today costs just $294 for a more powerful device.

Here are four reasons to consider edtech financing:

1. Financing gives districts more buying power and maximizes budgets.

Many schools look at technology purchases as one-time capital expenses. Superintendents scour the budget to see what money is available to refresh aging technology, and come up with a budget that can replace a portion of the technology. This happens every year, until schools have refreshed all equipment, and then the cycle starts over again.

The problem with this approach is that students in the same classroom are using various aged devices, often with different features and software. By financing a complete technology refresh, districts can put current technology into the hands of every student, and pay for it over four years before refreshing again, often for the same cost.

2. Financing ensures digital equity, while simplifying device deployment, management and support.

Schools that do annual partial technology device updates often have anywhere from three to five different device models being used by students. Since the manufacturer updates most devices every year, this means that students will be using devices with different capabilities and software. This creates a digital equity issue because some students will have a better experience with their technology-enabled learning than others.

Different versions of devices also create support and management headaches for the school technology staff, who now must service multiple device models that need different repair parts and require different software updates.

3. Financing provides a smaller, predictable annual expense for technology.

Unpredictable budgets are often the primary reason that large capital expenditures on edtech get sidelined and technology isn’t refreshed more often.

However, when districts view edtech like any other essential operational expense, such as electricity, internet connectivity and water, it becomes a planned expense instead of a “nice to have.” Financing gives districts a smaller, predictable budget for devices because the cost is fixed over the term of financing—typically four years.

Some districts rely on grants to purchase equipment, but grants don’t allow schools to plan for the replacement of outdated technology.

With financing, schools often can trade in equipment before the last year of financing is paid and have enough residual value in the devices to maintain the same annual payment for new equipment.

Financing also enables an edtech initiative to be sustained through leadership changes and cuts in state funding, since the technology expense is already a built-in line item in the budget each year.

4. Financing provides more flexibility.

When school districts make large capital purchases of technology, they tend to hang onto them far past the devices’ prime lifespan. Students often miss out on important features and software upgrades.

Alternatively, the most common financing method gives districts ownership of devices and allows them to pay for devices over a number of years.

A school district with iPads, for example, typically will have more residual value in their devices after three years than what they owe on their future payments for those devices. This enables schools to trade in equipment and use the excess to pay down future technology fleets, while maintaining a similar yearly payment.

Plus, since technology tends to get better and cost less year to year, districts may actually be able to purchase more devices for the same annual cost when it’s time to refresh. For example, an iPad that cost a school $479 in 2010, today costs just $294 for a more powerful device.

Finally, the biggest objection I hear about financing devices is that districts don’t want to pay a finance charge.

With rates currently ranging from 0 to 1.9 percent—and all indications are that rates will remain low—it’s worthwhile to talk with an expert who can run the numbers and advise you on if the benefits of predictable financing make financing worthwhile for your situation.

Mark Rand is VP, Southeast U.S., for Diamond Assets, a leading Apple trade-up partner. He has spent 10 years working with schools districts to deploy thousands of devices.

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