Explain Debenture

PerryCo · 17-02-2008, 05:59 PM

Can anyone give a good definition of debentures. It appears to be common to British usage. Some International Schools require a debenture, and I wonder how it is used. Thanks!

carang · 17-02-2008, 06:03 PM

a debenture is pretty much a non-interest loan that you, the parent pays to the school. you give them $ X and after your child finishes schooling, you receive same $ X back, no interest.
the school can then have use of these funds for whatever purpose they like.

hullexile · 17-02-2008, 06:42 PM

Originally Posted by carang:

a debenture is pretty much a non-interest loan that you, the parent pays to the school. you give them $ X and after your child finishes schooling, you receive same $ X back, no interest.
the school can then have use of these funds for whatever purpose they like.

I can see no other reason for them other than to force people to give money in exchange for a school place. Luckily I did not have to give one as I don't think Delia go in for this con.

XI_YAN · 17-02-2008, 06:53 PM

The Chinese use a similar system but then there are no additional fees, increases, uniforms or books. You know from the outset that 12 yrs of schooling will cost X. The interest the school earns covers all costs. The return of the capital means that the student has a sum of money towards higher education on leaving school. At least in theory that's how it's supposed to work.

PerryCo · 17-02-2008, 06:58 PM

Thanks for the fast replies. I think carang gave the best answer for my question. I was thinking of schools, and also Marinas around the area that require a debenture for parking a boat.

Thanks all!