The scope and scale of accounts receivables in higher education have never been larger. While manual processes for tracking and following up with student debt might have been sufficient in the past, institutions enroll potentially hundreds of thousands of students and manage millions of dollars in past-due accounts today. Every institution needs a stronger fiscal foundation to thrive.
“We’ve seen that many schools don’t have the tools or the bandwidth to dedicate appropriate resources to chasing past-due receivables,” says Becky Budner, ECSI’s senior manager of program management. “It is one of those things that’s tough to manage but has significant outcomes when done correctly.”
To shed light on what’s happening in accounts receivables departments in higher ed, ECSI partnered with Higher Ed Dive to survey 151 representatives from public and private two- and four-year institutions. The results point to what’s at stake for institutions that don’t proactively strategize and address their past-due tuition balances — as well as the consequences to students who don’t get the support they need to bring their balances up to date and stay enrolled.
In short, past-due receivables make up a significant challenge for higher ed institutions today. About 7 in 10 institutions surveyed disclosed past-due receivables portfolios of $1 million or more, with a significant percentage managing an amount that exceeds $5 million. Past-due receivables also command a large chunk of staff time and resources due to inadequate technology, leaving fewer resources to invest in student success and other institutional priorities.
The right technology can help accounts receivables (AR) functions address this challenge to improve institutional financial stability and students’ experience.
The universal challenge: Lack of tools and tech to manage the AR process
Survey respondents indicated an understanding that they need to do a better job reaching students early — both for institutional health and student success. But without the right tools, they simply can’t make progress in this area.
One significant limitation is time. About 74% of higher ed officers indicate their teams only spend 10-24% of their time attempting to recover delinquent tuition and fees. During this limited time, administrators face a number of challenges, including difficulty finding students with lapsed accounts, an inability to access financial data and problems communicating or coordinating across departments and campuses. For instance, survey respondents noted that they often don’t have a centralized source of knowledge about which students have past-due accounts, how much they owe and where they are in the outreach process.
Lack of secure financial data and/or visibility into that data poses another major challenge. Multiple respondents noted how difficult the lack of secure data makes recovering past-due tuition and reaching the students who need support. “The most difficult barrier is insufficient financial data,” one respondent said. Others pointed to ineffective tools for tracking data. “The biggest challenge is using outdated and not very effective financial software,” another said.
Unpaid tuition and fees are about more than cash flow for institutions. Recouping tuition dollars from delinquency in a sensitive and supportive way allows institutions to secure re-enrollments, improve the student experience and fund much-needed services and programs.
The next step: Suggested priorities for evaluating AR technology
It’s not enough for institutions to offer payment plans — these plans might not cover enough or be flexible enough to help students with their needs. Instead, institutions must actively decide which resources and technologies to deploy to help students pay delinquencies and help staff provide proactive, clear, consistent communications. By empowering AR administrators with the right technology and tools, institutions can proactively support their students’ financial journeys and protect enrollment numbers.
However, not all solutions are created equal. Higher education stakeholders will want to prioritize the following characteristics in the technology partner they choose:
Data security
Most importantly, accounts receivable information contains student financial data. How will a partner protect this data? Systems must comply with various regulations and laws to ensure student and institutional financial data is protected. Institutions must also use the right tools to secure and record student consent around tracking and using their data.
“Any time an institution is implementing new tools and processes, it’s important to look at the impact on student personal and financial data,” says Budner. “Not only should the software meet all privacy and security regulations, but also the people and processes behind the tools should be trained to protect student and institutional data.”
Integration
Visibility and transparency into accounts receivables are critical pieces of the puzzle. With proper integration, AR teams can identify at-risk students in as close to real time as possible and share that information with the other teams, departments or campuses that need it most.
Integration also makes it possible to maintain high standards for data cleaning. A good solution will help ensure an institution has the most up-to-date financial and contact information and make it easy to maintain that accuracy over time.
“Integration with an institution’s student information system is really the ideal scenario for a receivables management tool,” says Budner. “When a student makes a payment, that information should be reflected immediately across systems so that the balance is accurate and outreach efforts can adjust accordingly. Integration significantly reduces duplicate work and mitigates potential confusion around outreach.”
Compassion
A tool can only do so much when it only addresses data and processes. Security, functionality and integration are baseline requirements for accounts receivable technology, but the truly stand-out partners will demonstrate an ability to incorporate compassion and sensitivity into the experience of students who have past-due accounts.
That makes the mission behind receivables management tools critical. Solutions solely oriented toward collections, for instance, may not consider the full student experience. The common causes of dropping out of college include financial concerns and factors such as being a first-generation college student or a minority or having a lower income status. Look for a partner with a team that understands this and has experience working with students in these circumstances. A good solution should incorporate the student experience in all of its processes.
“Receivables management tools like ECSI’s RecoverySelect are extremely effective, not just because of the automation and process they bring to past-due outreach, but because of the soft-touch design,” said Budner. “The message and the timing of outreach should always start and end with compassion for the student and a genuine desire to help them get back on track.”
Institutions must stabilize their financial situations while protecting their ability to attract students with vibrant programs, desirable faculty and supportive financial guidance. The right AR technology can help recoup more tuition and fee dollars for the institution while also avoiding the negative consequences of collections and credit bureau reporting for students. Ultimately, institutions that effectively leverage AR technology can keep more students enrolled and engaged while also setting a firmer financial foundation — a better experience for everyone involved.
ECSI’s RecoverySelect is a comprehensive AR management solution that combines software and compassionate customer service to support AR staff and increase student retention. Learn more about RecoverySelect.