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Hidden Enrollment Killers: Are Clunky Billing Practices to Blame?
Student retention is a big challenge, and it’s natural to think solutions must be just as big and complex. We don’t disagree. At the same time, that mindset can blind us to small factors that have a big impact on student experiences and retention.
Case in point: We often think of financial burden hurting retention, but you might be surprised to learn that cumbersome billing processes — not affordability — could be driving frustration and turning off students to your institution. That premise is the target of a current study by Fitchburg State University, which we’ve recently discussed in a webinar, joined by leaders at Fitchburg and Salem State Universities.
Preliminary findings show how current billing processes might be impacting student satisfaction and leaving them with a “bad taste” for their institutions.
How payments drive or drain student satisfaction
The retail sector has long known that payment experiences change consumer behaviors. The same is true in higher education. From your students’ perspective, a cumbersome payment process could be a dreadful chore, on par with taxes and dentist appointments.
Good or bad, everything from accessibility to payment instructions, due dates, payment methods, login hiccups and more work together to build an experience that either drives satisfaction or annoyance toward your organization. What’s more, many higher ed institutions have different payment processes depending on wide-ranging criteria: graduate vs. undergraduate students, summer/winter vs. fall/spring terms, self-pay or financial aid, and more.
Consider, for instance, some challenges shared by our guest panelists at their universities.
At Fitchburg State, a segment of graduate and continuing education students registering for a class must submit payment within 24 hours, or they are dropped for nonpayment. “Some students trying to get into high-demand classes register every single day to reserve their seat knowing they’ll be dropped for nonpayment, which creates a lot of work for those students and the billing team,” notes Becky Copper-Glenz, Dean of Graduate, Online and Continuing Education at Fitchburg. Additionally, some students don’t understand the reason for different billing practices for different course types.
At Salem State, degree-seeking students have a due date model, differing from non-degree students. “For the sake of argument, think about a local resident who wants to take a course with us and gets dropped for nonpayment. They might be a potential degree-seeking student, yet we created a poor experience by dropping them. Similarly, we have an English language program and some of those students stay and become degree seekers, so they start several times throughout the semester, which is off cycle with our payment plan and due date,” explains Dr. Barbara Layne, Dean of the School of Continuing Education at Salem. “Often they register and immediately get a late fee, leaving a negative impression,” she adds.
Other common friction points at higher ed institutions include account holds for small overdue balances, standard deadlines that don’t work for non-traditional programs, difficulty identifying what is owed, and how or when to make payments.
Gathering data: Internal student survey
As they considered billing experiences, leaders at Fitchburg State knew that changing billing processes would require planning and resources from several departments, and they needed to gather evidence to support change. To that end, they started with an internal survey, capturing responses from 165 graduate and 33 undergraduate students.
Brian Schremser, Outreach & Recruitment Coordinator at Fitchburg's School of Graduate, Online & Continuing Education, shares a few early findings below:
▷ Clear understanding of payment policies/processes
When asked whether course payment policies were clear to them when they started the program, 66.7% of undergraduate students and 71.2% of graduate students agreed or strongly agreed.
▷ Satisfaction with billing/payment experiences
Most respondents (69.7% of graduate students and 63.6% of undergraduates) expressed satisfaction with billing/payment experiences.
▷ Method of payment
When asked about the payment methods they currently use for tuition/fees, most students reported self-pay (66.7% of graduate students / 57.6% of undergraduates), meaning some or all of their funding comes out of their pockets via cash, checking or savings accounts. Financial aid (15.8% of graduate students / 51.5% of undergraduates) and employer reimbursement (17% of graduate students / 21.2% of undergraduates) ranked next.
▷ Barriers to course registration
Students were asked to check factors that negatively impacted their course registration. Fitchburg’s 24-hour payment deadline beat course availability as a hindering factor for nearly half of respondents (49.7% of graduate students / 48.5% of undergraduates).
▷ Students dropped from a course for nonpayment
Nearly four in ten students said they’d been dropped from a course for not making a payment within 24 hours of registration (36.4% of graduate students / 42.4% of undergraduates).
▷ Impact of being dropped from a course for nonpayment
Respondents had to jump through extra hoops to secure their course seats if they weren’t able to make payment within 24 hours. Some never re-registered.
- 51.3% registered again for the course(s), made payment ASAP and completed the course(s) that semester
- 21.8% registered again, but got dropped again for nonpayment. They eventually registered, paid and completed the course(s) that semester.
- 11.5% decided to take the course(s) another semester
- 5.1% still have not completed the course(s)
▷ Preferred payment process
For students who do not use financial aid, preferred payment processes were as follow:
- 66.7% of all respondents prefer to pay by a due date prior to the start of the semester
- 26.4% of graduate students and 22.2% of undergraduates prefer the current process: paying within 24 hours of registration
As Fitchburg leaders analyze and expand their research, Copper-Glenz notes they have an excellent student billing team with rich experience in working with different types of students. It’s not about having an underperforming billing department but about the university’s structure and process.
“We’re taking a look at our whole structure and culture. If we look 10, 20 years out, what type of students will we be serving and how do we update our billing practices accordingly?” she explains.
For Dr. Layne, other billing data points worthy of review at your own campus include:
- When degree-seeking students have past due balances, how many credits do they have left to attain their degree? How can you help them cross that finish line?
- For students with past due balances, what’s the average balance? How long does it take them to pay that balance to have holds removed and return to good standing?
50 University reviews
Concurrent with the internal student survey, Schremser researched similar institutions to Fitchburg State: public, regional and small/medium institutions with similar U.S. News and World Report rankings.
A few commonalities emerged:
- Most universities use a due date billing model
- Most offer a payment plan
- Finding payment policy and information on school websites isn’t easy
- Summer/winter payment policies are often absent or unclear
- Some institutions require payment upon registration only for international students
- Some institutions require payment upon registration only for summer and/or winter terms
A few best practices also came into focus:
- Use a due date billing model
- Offer a payment plan for all semesters and terms
- Only require payment upon registration after the due date
- Offer third-party invoicing (e.g., billing an employer directly as a courtesy to students)
- Offer a graduate employer reimbursement payment plan
- Prioritize navigability for a smooth user experience
- Ensure billing policies and information are clear and easy to understand
Schremser points to Central Connecticut State University as a model for many of the best practices listed above.
Join the study: Share knowledge and identify opportunities
Next, leaders at Fitchburg State are expanding the survey to capture industry-wide billing trends and best practices. In addition to sharing findings with the higher ed community, Fitchburg also aims to create a survey tool that institutions can use to gather student payment experience data on their own campuses.
You can ensure you receive a copy of the findings by filling out this form. You’ll then be asked to complete the survey and results will be shared with you when ready. Also, look for an in-depth presentation of findings at national industry conferences in the coming year.
- Complete the survey on higher ed billing practices and receive a report on findings.
- Watch the webinar, Are Your Billing Practices Impacting Student Retention?
- What other opportunities are hiding in plain sight? Contact us to schedule a demo to learn how to integrate and automate data across all student experiences.