In my work as a FACTS representative, I once visited a school interested in using FACTS’ Actively Managed Payment Plans and Incidental Billing Platform to capture tuition and fees, provide payment options to parents, provide real-time reporting, and follow-up with families that had fallen behind in their payment obligations. I received a very nice “thank you” note from the school administrator, which read,
I know you’ve seen situations like ours many times, but for us, you were a voice of assurance that our plan can work. We are truly looking forward to working together – the sooner the better! I’ll be in touch very early in April.
Upon following up to set an appointment to move forward, I found that the administrator was no longer with the school, and that the board had decided to use an online donation program so parents could pay their tuition online and make contributions to the school.
That school is now closed.
Another school in a different part of my territory had used a similar online donation program for a number of years. Their new business manager gave me a call after finding the school had over $100,000 in unpaid tuition for the year, as well as additional amounts for previous years!
The bottom line: an online donation program is an inappropriate option, let alone a “best” option, to allow parents to pay tuition online.
Here are five reasons why.
Using one means:
- Lots of manual work to transfer recorded payments;
- The payment process is parent-controlled, not school-controlled;
- No follow-up for unpaid tuition provided by the online donation company – because they see it as a donation and not a payment obligation; and
- The “free” program isn’t really “free” because of all the time required to manage it, and the payment processing fees for each payment.
What’s the 5th reason? Tuition is not a donation!
Many schools allow parents to pay their tuition by check directly to the school because they believe parents find it more convenient to do so. However, collecting checks at a school can expose Personally Identifiable Information (PII), and that must be protected by the school.
Remember that a check contains an account number, which is uniquely associated with a name and address on the check.
But there could be another reason a parent may not want to make their check payable to a tuition management company.
If your school is still accepting tuition payments at your school, or at the church or parish with which it is affiliated, parents could make their checks payable to the school or church/parish with no indication in the memo line that the payment is for tuition. This makes it look as if the check is simply a contribution because these organizations are non-profit organizations, and these organizations also accept contributions from donors.
Make no mistake – tuition is considered to be payment for services, and is not tax-deductible.
Amounts contributed to the school over and above the cost of tuition charged to a parent, however, could be considered to be a charitable gift (as with any tax-related issue, remember to consult your tax advisor for up-to-date legal counsel).
Establishing a policy requiring all tuition payments to be processed by a payment plan provider like FACTS can protect your school’s families against this temptation, as well as provide payment security, mitigating the risk that comes with collecting checks in-house. It provides transparency, allowing parishioners and members of the congregation to know that their payment to the school is actually going to pay for the school’s educational program.
Handling cash can certainly lead to temptation on the part of those receiving it, and every day, we pray that we’re not led there.