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Solutions for Stranded Credits
Stranded credits is a hot topic in higher ed because it’s an extensive problem for students and institutions—6.6 million students have $15 billion in unpaid balances to colleges and universities. The pandemic has most likely increased these numbers, but solutions to the problem are available.
What are Stranded Credits?
Stranded credits are course credits a student has accumulated but not paid for. The institution puts a hold on their transcript, and may also prevent re-enrollment, until the debt is paid. Without a transcript the student cannot transfer to another institution or re-enroll, stalling their progress toward a degree. Even worse, long-held debts may be sent to collections, a result neither student nor staff want.
Multiple state legislatures as well as federal officials are considering bans on transcript holds for small debts, and the State University of New York recently ended the practice across their system of 64 colleges and universities. While these regulations will free students to re-enroll or transfer to another institution, the unpaid balances would still be on the books. Research estimates the average unpaid balance is around $2,300, with community college students averaging $600, small college and university students averaging close to $6,000, and students at large universities averaging about $4,000.
The American Association of Collegiate Registrars and Admissions Officers (AACRAO) estimates that 75% of institutions do not have formal programs and processes for eliminating this debt, which presents an opportunity to install payment programs that generate positive outcomes for all involved. Implementing solutions that address the stranded credits problem will provide benefits to students, staff, and institutions. In particular, tuition payment plans help students avoid debt, account and transcript holds, and the process of re-enrolling, while institutions maintain revenue flow and open the door for re-enrollment.
Payment Plans Offer A Solution
Payment plans offering installments and other options that institutions can tailor to their students have proven to be a successful solution to unpaid balances and helps avoid sending students to a collections agency. Payment plan installments provide students with flexibility and are usually implemented proactively, before a student has an unpaid balance. But they can be offered after a debt is accrued and act similar to “soft” collections.
Payment plan software allows administrators to create tuition payment plans that fit the needs of their students. Staff can schedule payments, charge service and late fees, send automated reminders and notifications, and more. The solution integrates with campus systems so when a payment is made this information is shared with other departments that need to know, like the registrar’s office.
When emergencies and special circumstances arise, administrators have the flexibility to waive fees, offer extensions, and make other adjustments as needed. Payment plan solutions can also manage complicated accounts, such as current and former military members who utilize the GI Bill and other sources that are regulated by the US government and require adherence to certain federal policies and compliance measures.
Administrators can view payment plan reports to monitor for trends and react to them with timely alerts and reminders. If a student or authorized user encounters a problem with their account, administrators have access to user activity to immediately track down what has or has not happened in the account. With accurate and up-to-date information, administrators can problem-solve with less complications and clearly communicate the resolution process.
Through a self-service portal students and authorized users, including parents and guardians, can enroll in plans in a matter of minutes, make payments with a variety of payment methods, receive real-time updates, and manage the details of the account. As payments occur, the system recalculates, auto-adjusts the plan installments, and notifies the user. Students, authorized users, and staff stay in communication and all know what is due, when it is due, and what options are available if plan changes need to be made.
From Problems to Positive Outcomes
Solving the stranded credits problem with payment plan solutions will help students move toward their education and professional goals. At the same time, the solutions will help institutions bring in lost revenue and possibly re-enrollment, too. Even more, by providing payment plans with the flexibility to fit payers’ needs, colleges and universities can develop a positive reputation as supportive aides of students on their path to degree completion, rather than their accounting adversaries.