Why is it so expensive to extend an Au Pair for an additional year?
A reader emailed to raise the concern that it costs almost as much the second year as the first, because there are fewer special discounts. (For one agency, that’s about $5,600). Not only that, but the au pair herself or himself has to pay an extension processing fee (almost $300).
All of the costs of getting an au pair into the selection process (e.g., recruiting, interviewing), the au pair’s training & orientation, and the au pair’s flights to and from the USA, are connected to that au pair’s first year. The only incremental costs that the Agency has to bear are the costs of medical insurance for the au pair, and the support of the Agency staff and LCC.
So, why are these incremental costs nearly $6,000?
Do the agencies want us to extend with our initial au pairs, or choose to match with an extending au pair, so that they can generate higher revenues off of extension au pair placements.
It doesn’t seem to make sense that the au pair and the host family should pay so much, when the Agencies’ incremental expenses for that au pair are so dramatically reduced.
The high fees for an extension year lead host families to feel like they’re being treated as ‘deep pockets’ and not as families who want affordable childcare and a cultural experience.
But wait, there’s more.
Some agencies “suggest” that the host family pay the nearly $300 processing fee “on your au pair’s behalf”.
And to top it off, some au pairs are told (or hear, or expect) that for their second year most host families will increase the au pair’s stipend.
If the agencies want to charge so much for the second year, writes this reader, why don’t they offer something additional to the host families or the au pair (like extra training, or a larger completion bonus back to the au pair)?
I wonder if the logic isn’t a bit more abstruse —
Maybe the “benefit” to the host family is the “savings” of stress, time, and work that accrue when we don’t have to look through applications again, interview over skype again, agonize over whether we’ve made the right choice again, or teach some one how to drive and use the TV remote again. More or less the same dollar payout, but an energy ‘savings’.
This is the same kind of logic that twists me up when I find myself buying a second pair of tween jeans at Delia’s because I can get “two for the (un-discounted) price of one”, when all I really want is 20% off the one pair.
Are this reader and I on a rant, or does the relatively high Agency fee for an au pair extension annoy other host families too?
{ 39 comments }
I have to consciously restrain myself from feeling resentment at most aspects of the agency fees. We’re going into our second year with our agency and their “loyalty” discount is $400 off–and only if you’ve had an AP for 4 years or more. They did match the “switching” offer of another agency finally, but I had to send several emails to get there. We looked into extending with our current AP and I had the same thought as you describe. So if you’re ranting unreasonably, I’m there with you.
Like everyone, I imagine, I am irritated by this cost. We currently have an au pair who extended with us, and I would much rather have given the additional money to her – after all, she’s the one who did all the excellent work that made me want to extend with her in the first place! I rationalize this to myself by assuming that the agency doesn’t want to create a “rush” on extension au pairs. If they are “cheaper”, extension au pairs might become attractive for the wrong reasons. Might some of us be tempted to extend with so-so au pairs if they became significantly less costly in their second year? Might we fight tooth and nail with one another to match with extension au pairs? I’m sure someone out there with an economics background can explain how having essentially the same “commodity” available at a significantly lower price would create havoc in the “market”. Yes, I’m sure this is what agencies are concerned about…
I for one, would not be tempted to extend with a so-so au pair, not even if there were a substantial discount. Having made it through one full year, the stress load was so high that if I reached that point again, I would be pushing harder to rematch. My APs have a steeper learning curve than most, given that I have a medically fragile child, but money is not what motivates me (otherwise I’d use the medicaid-funded nurses) – it’s stress!
Also I just extended and was surprised about the relatively high fee. With air travel and training already paid I expected much lower prices. We love our Au Pair and yes there is this significant saving of time and hassle and avoiding a bad match, and there is of course our happy child. Also I would have much rather increased the weekly stipend to the Au Pair so that she can have a wonderful 13th (or rather 25th) travel months.
I would love to see Au Pair agencies respond to this discussion and explain the fees.
Oh and our agency adds the $265 visa fee to the family’s bill, so it isn’t even suggesting or asking! On top of that, because last year we applied when they had a nice discount, with that fee, we’re paying the same per week as we were in year one… and since AP had an accident, our insurance went up $100/month. She’s only extending for 6 months (had she extended for a full year, the agency discount would have been slightly more, but our savings would have netted around $6/week… that’s more than rounding up to $200 for their stipend.) So we’re potentially saving (wait, delaying) the transition to orienting someone new into our family, but that’s it.
I think on extension au pairs the agencies are making back the money they lose on a significant percentage of unsuccessful au pairs, who bounce from family to family (knocking quite a few families off the au pair agency client list in the process), or who are being sent home during their year here.
I’ll bet you are right but I am feeling dense right now… how does an unsuccessful aupair cost the agencies money ? They’d pay the flight home at the end of the year.
It seems to me they could make money on a high turnover but then, I am not good at math
I think most of the agency’s expense is upfront – cost of travel and orientation, additional pay for the LCC to do the initial visit etc…. so if for the same fee the same family had to go through it twice, it costs the agency more money.
Also I think there is an indirect cost of losing clients and having to do more recruitment. How many families stay with the program after a rematch? I bet much fewer than after a successful year.
I’d think so, too (at least regarding the unsuccessful APs heading home), but it was my understanding that if the AP does not successfully complete her contract year, with her first family or any rematch one, te cost of her return is her responsibility. That may have changed in the last few years, as I have noticed the extension fees seem to have. So, at least when looking at lost income on the ones sent home, I’m not sure there is a need for recovery of costs.
The Extension Fee at my agency is $5000. Could be an informative survey to compare various extension costs among the agencies.
I believe with my agency the only savings is the airfare.
Don’t just compare fees, though! We did that (inspired by continuing frustration with the lameness of our counselor at the big agency), and saved a bunch of money up front by going with a smaller agency whom we THOUGHT would also provide better service. Then we lost those savings when we had to eat fees because the agency–who knew we were unhappy with our match but insisted we limp along through it–then said Oh, whoops! You passed a certain month mark and don’t get your fees back. Oh, and sorry! We just don’t have any rematch girls. Go pick a new one and wait 6 weeks. Uh, no. We couldn’t. Bye bye small agency, hi again to the big one and the same lame counselor.
The “math” on these questions is just not simple.
Same problem seen here by the small agency–tougher credit/refund standards, much smaller pool of rematch APs. The higher large-agency fee is for me the same as ‘rematch insurance’.
I seem to remember the extension fee seeming cheaper, but I wonder if it was because we only extended for half of the year so it seemed cheap because it was half. I agree there should be a substantial discount because you are saving them a lot of money by not having to interview, screen and fly a new au pair here. It was nice to extend, though, because our AP was really good and she already knew the drill. In addition, it was more stability for our children who were very close to her. Our current AP does not want to extend, which is fine. I think I ready to get out of the AP program or at the very leat, take a break.
I think it would be interesting to have a breakdown of what the typical fee goes towards. My 6k annual fee is broken into (these are what I can think of, is there more?) an amount for recruitment, training, transportation/visa, local support, basic insurance, advertising, regional/national support. I’ll bet the biggest chunks are on local/regional/national support. That doesn’t change with an extension AP.
Also, with all of the bad extension stories here, I wonder if the success rate for completing the extension period is any higher than it is for a new match.
I have also thought it was strange there was not a bigger discount; I think a lot of the upfront costs are covered by the money they require from the AP (depending on the nationality — my Brazilian AP put a lot of money toward her initial application and visa).
In my experience, (recognizing that I’m an “outlier” on the bell-shaped curve of hosting) extensions are MUCH more successful than initial matches. The key is to not get complacent as host mom–you have to manage the extension year, can’t just assume things are great and rest on laurels. There are different issues that will come up, most of which can be anticipated and managed.
As for costs to the agency, I do think they are significantly less for a second year. I’d be surprised if emergencies are more common for second years as first years. The girls are settled, know the paperwork routines, and tap other networks for support.
I agree with Calif. Mom. I’ve never had a problem in extension that I didn’t have with my one-year APs. DH, on the other hand, wishes we could ask outright if the AP would commit to 2 years (he’s tired of the annual search). 3 out of 6 APs have extended with us, and another wanted to but we didn’t. AP #7 is 1/3 through her year with us, so too early to offer to extend.
Actually, the thought that the fees have gone up, not only for rematch APs but also Year 2 APs who are going to another family for that year. It came up for us this year, when we started looking at Year 2 APs who wanted a different experience (either different region of the country, different ages of kids, etc). We were looking at them not because of what I thought would be a cost difference, but because of the experience in the US the AP already had (we really need strong drivers who are careful at the same time).
That was when we were informed that there was pretty much no cost difference in the Year 2 APs (but there was a small one for the extension of the AP we had, if we had wanted to do that). It made me more than a bit curious about the cost (I mean, if they are already in the country, just how expensive could their plane ticket be?).
I’m sure that some of it is a balancing of various costs for all clients, rather than just one group or another, but it does seem to be that the costs have increased overall, and that the extension/Year 2 more than previous increases.
In this time of no one getting merit raises, much less cost of living increases for the last several years (and for next several to come), it is hard to argue that this is an “affordable” form of child care. Especially once you add in the increase to our car insurance, household bills, education costs, etc., it is more about the cultural and the “flexible” child care (don’t get me started on that one now; I don’t think all the applicants have gotten that memo) and far less about the “affordable” part. Still going to continue with the APs, though, as it is a better fit for our lifestyle and what we want for the kids, but yeah, the 2nd year costs do raise the brow a bit.
Don’t forget, though, that other childcare costs are also going up. The before-and-after-care costs at our kids’ schools have gone up annually though salaries haven’t. (I joke my hub’s employer puts the “non” in non-profit!)
There may be regional variations at play, but I doubt that nannies have stopped asking for raises or additional perks in our metro area.
I sent this post to my local coordinator and my regional coordinator asking for a response. I have yet to receive one. I recommend everyone else do the same!
There are probably a lot of expenses agencies have, of which. we host parents may be unaware. On the surface, the fees seem large. However, like any business, the cost of a service or product includes overhead related to necessary professional services like liability and professional insurance, legal fees, CPA fees, audits, licenses and such. Attorneys and CPAs are not cheap. Similar to retail goods which include losses like theft in pricing, au pair agencies probably include losses in their pricing. Then there’s rent and salaries for staff like bookkeepers, administrative assistants, program managers, field personnel, overseas personnel, workshop instructors, plus I imagine, a lot more.
Families also have indirect costs related to hosting au pairs. These include room, board and auto insurance to name a few.
It is my understanding the State Department told agencies they can no longer give a completion bonus to au pairs or ask for a “performance bond”. If true, agencies lost a means to offset some of their losses related to replacing au pairs who walk out on families, return home early or go into rematch. As Anna posted, the initial expense to replace an au pair may be non-recoverable expenses. We went into rematch when a former au pair got homesick and returned home. However, our pro-rated credit covered the in-country au pair we selected. So the agency gained no additional revenue from us.
As for au pairs paying the extension fee, it may be an agency’s way to ensure an au pair’s commitment toward extending. We’ve heard about au pairs who tell their families they will extend, then leave their families within one or two months into the extension.
When doing the math for our extension, we realized we were getting the same care at an average savings of $26 less per week, saving more than $1800 for a year.
Our AP is considering extending, and I was also annoyed at the lack of discount. But honestly when I think of it overall, it makes sense. Extension should not be cheaper–as has been said, that would be a weird incentive system. We are paying for “having an agency”, not really for the specific airfare/recruitment costs. It is the cost of “having an agency” in match, rematch, extension, etc. If I think of it this way, it helps me. It likely is the case that extension APs, as an arrangement, ‘subsidizes’ all the rematches in effect. I think the agencies should be non-profit organizations, however. I’d love to see how much money they make.
It is possible to ask your agency for a repeat family discount – especially if you have been with them for several years. Our agency offers a discount for families that have been with them for 5 or more years. It doesn’t hurt to ask “What can you do for me?”
I agree with you – when you think of the annual fees as the cost of “having an agency” it seems easier to swallow. However, when you’re not getting what you want from your LCC or the central office, the fees may be harder to swallow (we’re fortunate – our LCC is fantastic and our central responsive).
There are at least two agencies that I know are non-profit organizations (AuPairUSA or Interexchange is one, and I forget the name of the other)
CHI is non-profit.
This is the thread with perhaps the most relevance to my question:
I feel like my agency (CCAP) is not entirely transparent and forthcoming with the discounts. I didn’t get an early matching discount last year–which I just realized this year when we did get one. Is it because I didn’t ask for one? Somehow I didn’t know it existed. Also, the emails I get explaining what I owe don’t exactly match what online says I owe. And the early matching discount I was quoted in an email did not match (was smaller than) the chart of early matching discounts I found on the agency website (and it was NOT easy to find, may I say). Plus I applied in December to ‘lock in’ 2011 fees but the fee I’m now charged is higher than the fee listed on the statement last year where it says “program fee”.
Obviously I’ve written my email detailing this to the accounts person, and will continue to perform due diligence, but I’m just wondering if anyone else, with any agency, feels like they have to keep right on top of the agency to make sure they get their due discounts. Is this something where the buyer must beware and take notice of the accounting?
Thanks for bringing this up. I am also with CCAP and had to contact them several times last year because I did not get the early matching discount initially (I did eventually get it). I never occurred to me to double check and make sure the discount I got matched the one offered, however. Also, I locked in to the 2011 rates and didn’t think to check and see what they were (I will be doing so now!).
In addition, I have to say that I was very disturbed by the fact that AFTER lock-in they changed their transition policy and and sent the information out in a winter newsletter that I’m betting a lot of host parent don’t read. While I understand that 1 month-no transition may be the “industry standard”, I don’t like the idea of having to wait if an AP is obviously not going to work with my family. Not having to worry about housing an unhappy or unqualified AP for one month (not to mention having to wait to begin looking for someone else) has been one of the reasons I’ve stuck with CCAP – not sure where to go now.
Yes, CCAP’s new no-transitions-in-the-first-month policy is disturbing. Is it really industry standard? APC and APIA people, is that so? We have had a lot of posts on this blog where a match is clearly, after FIVE days, not going to work out, so why should everyone have to wait–and kids get attached? Actually, though, I can imagine that the 1-month rule is the kind of thing that tenacious complaining to higher-ups can get you out of. Especially if you are a customer with history at that agency, why would they want to embitter their repeat customers?
I’ve been with agencies with 1-month rule, and I have taken once a rematch au pair who left her first family in this agency after 2 wks – so it does appear that if the family puts its foot down, the one month waiting period is not enforced. That particular au pair was in rematch for driving. So if the reason is such that waiting one month will not change anything, looks like some agencies are reasonable.
Interesting story Anna. Frankly I see the point of a 1-month rule in less clear-cut instances of potential mismatch, because it does sometimes take awhile for ‘chemistry’ or mutual affection to develop, and especially after a great au pair leaves the first few weeks with a new one can feel like a come-down. This rule also does protect HFs from APs who suddenly ‘realize’ upon arrival that having their own car was a bigger deal than they thought or discover they can go HF shopping. So the 1-month rule might function as ‘encouragement’ for HFs and APs to get used to each other and settle in. But I can easily imagine that squeaky wheels would get greased if an agency wants to keep their customers.
I meant to add that, despite the new transition policy and the relatively high fees, I will be sticking with CCAP for this reason alone–if you end up in transition, they do give you contact info for the incoming au pair’s previous host family. Not all agencies do this, and therefore this to me outweighs the importance of whether an LCC is no good and even the cost of smaller agencies. Otherwise I cannot imagine taking an au pair from a transition. (And I did once, in rematch, take an au pair from a HF who gave a poor recommendation but after lots of talking to lots of people I came to believe that truly the family was unfair and not right for the AP program, and the AP worked out well for us; so a good HF rec is not required, but I need to be able to investigate ‘the back story’ of the rematch for myself.)
I would really love to hear everyone’s experience with the policy of no rematches within the first month. I am wondering if there are actually any pros (besides the agencies saving money) or if there are all horror stories. CV, do you think this could be its own post, please?
I think that is the case with all the agencies, to some extent. which is unfortunate. We negotiated a LOT this last contract, and I made it clear that we were going to use another agency if our current one could not match the best deal we could get elsewhere. We’ve been happy with our agency but not over the moon, and not enough to justify paying more than we would with another agency. It’s unfortunate that HPs can often get a better deal from a competing agency rather than by using the “loyalty” discount (which is a joke with my agency). We were able to use our competing offers to get a discount of almost 20% this time.
Did you do this negotiating before selecting your AP, or after you had selected but before paying the Big Balance?
Both–initially before reapplying we asked and were offered a discount that would match what the other best offer was. But then when we matched and I got the bill, surprise–the discount wasn’t there. I said “OK, no problem, I see you’re running a promotion where I can get $X off, let’s just do that.” The rep said that no, that was only for new families. I then asked her why on earth I would stay with an agency out of “loyalty” when I wasn’t getting any benefit, and it was going to cost me substantially more than it would to go to another agency, and she processed the discount. My big hangup was that shopping around is rewarded far more than loyalty.
Followup post: Agency did provide explanations of the discrepancies. To lock in 2011 prices means also receiving 2011’s early matching discount, which was lower than the early matching discount now listed on the website (I can’t find any way to verify what the discount was in 2011). Plus the “program fee” listed when I paid my balance in summer 2011 was the amount I had locked in in December 2010 at 2010 rates (I’m having trouble verifying that fact); so my this-year’s locked-in 2011 rates are higher than what I myself paid as a program fee in 2011 (because I paid the 2010 rates, not the 2011 rates). Good news is that I will get last year’s early matching discount applied to my account. And the person noticed I had not yet gotten my deposit applied to my account.
It pays to review those account statements.
Call and complain. I am extending with my current au pair and that is exactly what I did. I got a “small” reduction, but unless we all call and complain, these agencies are not going to do anything.
Which agency? How much of a discount? Please share your strategy/approach! We are about to do extension paperwork and I would really appreciate learning from your success!
Trust me, it wasn’t much but we got them to waive the government extending fee (which I found outrageous being that they are charging almost $6k for extension fees and then wanted to tack on an additional $233) and also got the repeat family discount (again, nothing outrageous, but at least its something).
Comments on this entry are closed.