To Drop or Not to Drop: 6 Strategies for Dealing with Tuition Delinquency

No Entry shutterstock_331164347.jpgNo student wants to be dropped for delinquent tuition payments, and no school wants to drop them. And yet the problem persists.

There are several reasons for this, of course, not the least of which is the 186 percent spike in student borrowing over the last decade (NerdWallet).* And given the limited means of the average student, it’s not surprising many start out prepared to make first-semester payments only to falter after that.

So what’s an upstanding, mission-driven school to do? How do you avoid dropping a student and risking your revenue stream – not to mention retaliation on Facebook?

Here are six proven strategies with mutual benefits for the school and the student:

  1. Be proactive about financial literacy. Communication is key. Have your student finance counselors reach out every quarter to talk with students (and parents) about financial literacy. Make sure they know the basics of money management (including not over-borrowing) and that you have their best interests at heart. Then use whatever means you have – your website, newsletter, email – to issue updates and early reminders about due dates so they stay top of mind.
  2. Set clear policies and make them known. That means straightforward education for students and parents about your policies and their responsibilities – well in advance of that first tuition payment. It might even make sense to require a financial responsibility agreement. Also, clearly state any stipulations your school may have in terms of add/drop, reinstatement or degree-seeking versus non-degree-seeking students. And remember: In addition to including your school policy in your tuition contract, it’s also a best practice to publish it on your website.
  3. Stay open to working out payment plans. Life happens, and when it does the best course of action is a payment plan. That way, a cash-strapped student or struggling family can keep chipping away at tuition payments versus digging themselves into a deeper hole. Set payment plans to start prior to the first day of the school year and end at least one month before the last day, so you have ample time to collect late payments before summer break
  4. Provide plenty of payment options. Align your due dates with standard payroll dates and use a third party to manage your billing and process payments. Doing so lets you offer a full range of payment options (i.e., ACH, credit, debit, online and phone) as well as an extra level of protection against security breaches.
  5. Make students aware of potential credit consequences. Ensure students understand that failure to keep their account in good standing can affect their credit-worthiness for years to come. A delinquent student who knows the ramifications of ignoring the situation is more likely to deal with it.
  6. When all else fails, try again. And keep in mind, payments and payment plans can be offered past graduation. It’s always better to have a successful graduate that’s paying against an overdue balance than turning an account over to collections.

To learn more, click below to read our eBook, “A Guide to Managing Delinquency at Your School.”

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*https://www.fool.com/retirement/2017/06/25/the-average-american-has-this-much-student-loan-de.aspx

 

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