The issues of affordability and retention challenge colleges to develop sustainable tuition policies that address the current economic climate yet educate students on the importance of paying their tuition bills on a timely basis. This web seminar, originally broadcast on October 16, 2012, discussed how Nelnet’s solutions, combined with tighter school fiscal policy, can help students meet their tuition obligations even if they do not receive all the financial aid they anticipated. Michigan’s Kellogg Community College explained how they use Nelnet’s Pending Aid plan to decrease outstanding student receivables even when faced with increasing enrollment and rising tuition costs.
Students need more affordable options to start and continue their college studies so they can complete their education and be prepared for the workforce. Nelnet offers solutions that make this easier for institutions, particularly actively managed tuition payment plans. We make administrative and financial processes more efficient at 700 campuses across the nation. Different factors impact affordability in higher education.
College costs are rising, state funds are declining. A 2011-2012 study found that 37 states are projecting spending less on education in the coming year than they did in 2008. New financial aid rules tying aid closer to performance are impacting its disbursement; Family income is unstable due to unemployment and the uncertain economy. Some families are turning to community colleges as a lower-cost alternative to public four-year institutions. A College Board report found that the average tuition at a two-year college is approximately 64 percent lower than tuition at a public four-year school.
As a result, students whose families make less than $60,000 a year make up approximately 55 percent of community college enrollment across the country. To serve students from an affordability and retention perspective, schools have to be more certain they will be able to collect what is owed to them. This is greatly affected by tuition policy. Nelnet suggests colleges think through the following questions:
- Do you have an effective drop or deregistration policy?
- Do you allow students to attend class while financial aid is pending?
- How do you collect money from students who do not receive 100 percent of the aid they applied for?
- What happens when a financial aid student drops out and you need to return aid?
At some schools, administrators meet and decide whether or not to put a hold on a particular student’s account based on an appeal or special circumstances. However, this is counter-productive compared to a consistent business process backed up by school policy. Further, there have been many stories of students registering for classes, receiving Financial Aid, dropping the classes, and taking the money. This leaves the college with a Title IV return and an uncollectable account balance.
To prevent such situations, it is important that the college offer proactive solutions to students. By aligning policies with business processes, and communicating them effectively to students and their families, schools can create a positive balance between affordability, retention, managing the collection process, and customer service. To enhance student success, many colleges turn to third-party providers to leverage additional customer support. For example, Nelnet’s call centers have extended customer-service hours and students can access their web account 24/7.
By incorporating real-time integration with your student information systems, students are able to see exactly how much they owe when they are ready to make their payment commitment. Further, providers like Nelnet can improve affordability by spreading payments out and offering multiple plan options. Our system allows students or their parents to pre-schedule withdrawals from a bank or credit card account for ease of use.
Monthly payments are automatically adjusted based on reductions or increases in student accounts. We offer long and short-term plans, as well as the Pending Aid plan, which Kellogg utilizes. Ideally, you want your students to recognize their obligation to pay the college. However, those who apply for financial aid often find themselves in a situation where they don’t have the cash to pay up front.
The Pending Aid option includes three different groups of students:
- Group One pays their balance in full.
- Group Two signs up for the payment plan immediately and begins making payment on their account right away.
- Group Three students with awarded aid are offered the Pending Aid Option with no money down, no enrollment fee and no monthly payments until after aid is disbursed.
If there is a shortfall and their account balance is greater than zero, students can pay in full within 10 days or a payment plan will be automatically activated. The Pending Aid plan allows the college to be proactive by forcing students to select how they will pay before classes begin.
When I came on board in 2004, student receivables were on the rise at 5 percent of gross tuition dollars. In Michigan, 1 percent is considered stable. We knew we had to get this under control. Michigan was also disinvesting in higher education costs, with cuts close to 10 percent. At the time, we had a lenient, constantly changing payment plan that did not require anything down and payments that began after the semester started.
We became aware of the financial aid abuse that John spoke of and decided to tighten up our policies. In 2005, our clerk who managed in-house payments left the college. This provided us with the opportunity to look at third-party vendors for payment management. We decided to go with Nelnet because it was a high- quality, low-cost program.
We implemented their Pending Aid program for students with balances on their account, as well as an attendance policy with faculty. Students not attending classes would be reported to the Financial Aid department so aid could be pulled before refunds were disbursed.
In the fall of 2006, the college discussed what constitutes financial aid and what makes a student eligible to enroll. With that in mind, all students are directed to a regular payment plan application or the Pending Aid option depending on the information on their account. Nelnet is set up to look for specific financial aid destination codes coupled with action codes that indicate “accepted” or “pending” and a balance greater than zero.
If these codes are found, the student is automatically referred to the Pending Aid application. If not, the student is directed to the regular payment plan. We discovered that students are not interested in budgeting their money and would rather not pay the college. They will wait until the last minute before making any payment decisions. To combat that, we now drop students within 24 hours if they do not pay in full or enroll in a Nelnet payment plan after registering for classes.
Since Nelnet, we have achieved consistency in outstanding student receivables amidst years of record-high enrollment and rising tuition costs. It is evident the plan has worked for us because enrollment and retention is now solid. Students are invested in their course schedule because they have to pay for their choices. We have established better communication and a consistent message to our students. They now know exactly what to expect with the plan. There is also a greater understanding of the constraints our Financial Aid office is under to get the following year’s packages out in a timely fashion while still working on current projects.
We have addressed this by giving our students and staff more time with an extended enrollment period. This relieves pressure on the office from students who wait to file until right before the beginning of the semester. One of the lessons we have learned is how important it is to keep the lines of communication open between administrators, Financial Aid, and customer service regarding campuswide policies.
We openly talk through changes before implementation. We also learned that students are semester focused and do not want to pay in June for a class that starts in September. We keep this in mind when considering registration open dates, financial aid processing dates, and semester start and end dates.
To watch this web seminar in its entirety, please go to http://www.universitybusiness.com/ws101612.