Revolutionizing higher ed affordability: How institutions can better support students by proactively addressing collections

When colleges and universities work proactively to help keep students on track financially by engaging with them before they fall behind on tuition bills, everyone benefits. Student wellbeing is improved, the affordability of higher education is addressed and with more transparency into payments – and more being made on time – staff are able to work more efficiently while institutions increase cash flow.

Attendees at a recent Flywire webinar “Embracing Change: How to streamline your collections to better serve students,” heard how two New York universities were trying to balance the need to support their students with the need to collect past-due payments.

Shifting legislation makes it more important than ever to take a proactive approach to collection management. The New York Fair Debt Collection Practices Act (NYFDCPA) that recently came into effect makes it harder for institutions to collect past-due debt from students, crucially restricting the methods institutions can use to induce payment. It also reduces the length of time they are able to collect debt – down from six years to just three – a time limit which cannot be reset even if a payment is made towards the debt.

Higher education affordability is a constant discussion point for the industry, and though some institutions have taken action, the steadily increasing cost of living means more students are missing tuition fee payments after falling into financial difficulties. But colleges and universities don’t want to have an adversarial relationship with their students who get into financial difficulty, or to punish them, explained Lisa Vinciguerra, Director of Student Accounts at State University of New York (SUNY Oswego). Instead, she asserts that most (if not all) want to support and collaboratively work with their students to help keep them enrolled through graduation.

However, this approach comes at a price. Lisa and her team struggle with the workload associated with manually monitoring student payments, as well as how to engage students who have missed payments and who, on the whole, don’t read or respond to emails. Being a four-year state institution, as a result of the NYFDCPA, SUNY Oswego has to follow certain processes for collections. For example, they have to refer debts over $10,000 to the Attorney General’s office for collection, and on all debts referred, they lose 22% to fees.

Two years ago, the team at Columbia University was in a similar situation. Grappling with a manual, multiple-step process on a daily basis, they needed to move data from their closed legacy system into their receivables management tool to present payment plan options and track payments.

“We were in a reactive state. All communications were done by email. For example, if a student did miss a payment, all reminder communications had to be manually initiated. Additionally, representatives had to set up payment plans on an ad-hoc basis as a student requested it,” said Jino George, Director, Financial SFS at Columbia University. “If the debt had to be referred to an external agency, the student’s data was transferred to them manually.”

All in all, it was a less than ideal process, and Columbia University wanted to address affordability proactively so they looked for an “all-in-one” solution that would allow them to better support students by offering self-service payment plans, automating communications to those who either had missed a payment or were at risk of doing so, and automating their manual daily processes. That solution was Flywire.

Columbia now offers three- and six-month payment plans to all students, and if those terms don’t work for a student they are encouraged to contact the billing team to set up a custom plan that better meets their needs. As well as addressing affordability for all students, Jino’s team now has an easy-to-understand dashboard that not only gives them visibility into all payments, but also the ability to use data to proactively identify students at risk of missing a payment. Communication has become easier with automated email reminders and warnings being sent to students. This earlier intervention is successfully driving more students to pay and reversing their past-due status. It was this automation that was the key differentiating factor for Columbia in their decision, saving staff time while increasing overall collections.

In two years, Columbia University has revolutionized their collection management process; increasing efficiency, transparency and security while reducing staff (and student) stress. Overall, they have improved the student experience, resulting in increased student participation and payments. What’s more, by proactively working to make higher education more affordable not only have they seen a staggering 60-70% increase in average return, but they have successfully reduced their exposure under federal and state laws and, crucially, improved student retention.