There is a Chinese proverb that says, “The beginning of wisdom is to call things by their right names.” During the time I was working for a Diocesan office for Catholic school administration, I would cringe every time a family was sent to “collections.” It meant for some reason or reasons, a family had failed to fulfill their tuition obligation.
Sending a family to collections destroys a relationship with a family, since all the family’s financial information is turned over to an agency that is licensed in that state to perform this service. What’s more, a percentage of monies successfully obtained by the company is retained by the company as payment for their services. If a family owed $5,000 to a school, and the company was successful at collecting $3,000, the school may only receive $2,000. The unseen and unintendend consequence is that since parents talk to parents, this action destroys trust in the rest of the parent community! For some reason, school leaders believe that because parents want to be treated as individuals, they believe that all things will be kept between the school administration and the parent. But that’s not today’s reality. People on social media “like” and “share.” It’s how today’s communities are built. One of the main purposes of this site is to move school leaders to embrace “systems thinking,” and this is a great example. Nothing happens in a vacuum (great phrase that works on multiple levels).
If a school wants to build positive relationships with its parents, just the threat of sending them to collections isn’t the way to do it.
Successful tuition “capture” is different from a “collection” process precisely because of how the processes work. That is, “collection” is reactive; “capture” is proactive.
Today, capturing tuition is more than telling parents they have to use a tuition management provider. It’s not something a school can put on “autopilot.” They may use a great tool, such as FACTS’ Financial Management System, including Actively Management Payment Plans, Incidental Billing and PrePay Account functionality, but not enforce the tuition policy outlined in the school’s policy handbook. Or, they’ll use FACTS, and have excellent financial policies, but not assess how much the family can actually afford to pay for tuition. Indeed, there are 3 components necessary to a successful tuition capture process, which allows you to become an “ACE,” if you will. Your school needs to have a way to calculate a family’s “Ability to Pay,” a “Comprehensive Tuition Capture Tool,” and an “Enforceable Tuition Policy.”
Ability to Pay
A family’s ability to pay tuition is essential for a school to know when determining the budgeted financial plan for the school. “Hoping” families can pay the “announced tuition” and then not having financial aid funds, as well as a process to determine a family’s financial need, is one of the greatest factors contributing to enrollment decline in schools that charge tuition. Some schools are reluctant to implement such a process because they have no financial aid funds to distribute. Even if that’s the case, a Grant and Aid Assessment process will let your school’s designated administrative representative know how much a family can afford to pay for tuition. Asking them to pay more than that may cause them difficulties, and, in turn, cause your school difficulties as the year progresses.
Comprehensive Tuition Capture Tool
What do I mean by “comprehensive?” ALL families should be on the platform which acts as your financial payment and reporting tool. All students are on your Student Management System, right? Similarly, all families need to be on your Financial Management System to provide as complete a financial picture as possible. It should be “real time” too. That means when a family makes a payment, and there are funds in their bank account, the payment is considered paid, and not simply “waiting to be processed.” FACTS’ payment platform provides a customizable “Dashboard-style” reporting of key metrics in two different formats so you can know at a glance where your families stand relative to their payment obligations. It also makes a monthly report to your finance council as easy as printing a screenshot and copying it for distribution right before the meeting. What’s also important to know is what fees are associated with the provider you choose to partner with, including whether or not you have full control over late fees, partial payment fees, or fees for follow-up services, who is responsible for paying those fees, and what happens if those fees are not paid.
Enforceable Tuition Policy
Your school may have a tuition policy as part of your parent handbook. Parents may even have to sign a copy of the book and bring the signature page to school as proof it has been read and they agree to the terms and conditions specified. Such a policy needs to spell out the expectations relative to financial aid application, enrolling in the tuition payment platform, and the consequences of non-payment of tuition. Some tuition policies specify that if accounts are not made current within a particular time frame, the account will be turned over collections. For a family that knows they may have difficulty meeting their obligations, that phrase is enough to make them withdraw their child from your school, or simply not enroll them.
Tuition policy creation is an art. It must be strong, yet non-threatening, containing accommodations for financial aid, flexibility and fairness. While turning a delinquent account over to “collections” may sound like a prudent financial practice, schools have eventually closed even if only a few families were sent to collections. Remember, parents talk to parents, and families talk to families – and a grandparent may talk to someone else’s grandparent (and today, even great grandparents are on Facebook)! Perhaps the families that simply heard about the practices wondered what would happen if the same circumstances that befell their friends happened to them.