We have all felt that moment. The anticipation of a reward for some effort made. The reward of getting an allowance for doing your chores around the house when you were a kid or spending a dollar on a lottery scratch ticket and doubling your money, there is nothing like getting something you want after making an effort. When your acceptance letters are sent those are moments anticipated and celebrated.
Your students, enjoying that moment of pure joy at the professionally written letter addressed to them from your institution of higher learning, expressing an interest in helping them to achieve the goal of a diploma in a field of study that interests them and drives them is the moment they want to last forever. Sadly, that euphoric feeling almost always crashes into the hard cold reality of the school bill.
In a career that has spanned 17 years in the education payment space focused on helping students and their families answer those questions concerning meeting their education financial obligations, I have come to recognize that moment as “payment panic”. Not always easy to detect at first, but in my experience payment panic does impact most to some degree. What can you do to defuse payment panic?
There are options to getting the bill paid. Just getting that statement to resonate to your students and families goes a long way in helping defuse payment panic. Most schools offer payment plans that can take the semester or term balances and divide it into smaller monthly payments. Getting this information in front of your students, and more importantly the “bill payer,” is vital in curbing payment panic. Seeing is believing!
Seeing those smaller monthly amounts will instantly remove some anxiety over bill payment. Coming up with a plan that has flexibility in terms of payment methods (ACH payments, Payment Portals, credit cards or EFT payments) also helps alleviate panic. You already know you do a great job communicating options to your students. And speaking to an expert around education payment and affordability does provide relief. By conveying an important message like “You are not in this alone”, the panic they may initially feel when opening that envelope to reveal the bill is temporary. Getting students and their families to plan ahead is the key.
A plan centered around paying for education expenses should not feel like a daunting task that you sometimes want to avoid (like cleaning your oven or balancing your checkbook!) This is the moment to help them reach a state of peace of mind.
A plan can be as simple as receiving the bill and confirming balances in their savings/529/checking or investment accounts and setting up a transaction (bill pay service, ACH or recurring payments), or writing a check that gets the payment to its destination on or before the due date. Other plans can be more complex and center on a monthly budget and monthly income using your school endorsed payment plan. Providing counsel on how to plan….that’s a challenge. ( Learn more how teaching your students the basics of financial literacy).
Broken down in its simplest form, I counsel students and families to carefully lay out all their typical monthly expenses and get a handle on their monthly income. Once that is done, they are ready to build a plan. Well, a calculator will also come in handy. Subtracting their monthly expenses from their monthly income is a good place to start. Whatever funds are left over is what is available to use to pay towards their educational expenses. If that amount covers it, they’re in a good place and there should be no payment panic! Reality dictates that not everyone will be in that “good place” and will need additional help. Understanding the need is still present, there are still options to explore.
Of course, exploring options available are relative to the timetable set by you the school. There is a bill that has an absolute due date. The sooner students and families explore those payment options, the better prepared they are to meet the obligation. Let’s face it; the amount of research available is exhaustive. Information overload is common. I always advise students and families to give themselves some time to explore online what payment options are available and your website is a great place to get started! There is much to consider but if you don’t allow time to review the options, they can’t remove the obstacle that panic can create.
When speaking to students and families about building a plan I advise them to gather as much information as they can and to keep good records (a notebook, an excel spreadsheet or using a software off the shelf about family budgeting). They should note important factors such as the payment due dates, their budget, and how much they are able to pay upfront. Then, as the family begins to meet payment due dates and budgeting challenges, they can refer to this plan to execute their process. Should unplanned expenses occur, they will have done the necessary legwork (such as understanding the payment options offered by their school) to tweak their expenses without undue stress.
Payment panic will be a thing of the past once they execute their plan. The best thing about getting them over the payment panic hump is the peace of mind that comes with having students who have a plan that meets your requirements to getting their bill paid and paid on time. Queue up that euphoric feeling again!
Written by: John A. Costa, SVP Family Services, Tuition Management Systems