"It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness.
Charles Dickens penned the opening lines of "A Tale of Two Cities" to describe French Revolutionary times, but they could easily apply to the modern world of student refunds. Or, more specifically, to two of the primary alternatives to paper checks.
One is simple, secure and smart. The other can be convoluted, controversial and painful for students.
Refund #1: Direct Deposit Model
In the working world, employees have for years roared their approval for direct deposit. So have taxpayers and Social Security recipients. Payers and payees alike have widely accepted the Automated Clearing House (ACH) network as the preferred, most efficient and reliable way to exchange funds electronically.
Which helps explain how ACH transactions have continued to grow exponentially since the network's inception, and why more than 13,000 banks nationwide are National Automated Clearing House Association (NACHA) members. In other words, direct deposit is the standard. Period.
Why should student refunds be handled any other way? Anyone familiar with the costs of processing a paper check payment knows how easy and inexpensive an ACH transaction is. Electronic refund "checks" are no different. The school saves big time by dramatically reducing costs for printing, cutting and mailing.
What to do for students without bank accounts? Sure there are a few college students that are either unbanked or under-banked. In Higher Education, however, the number is very small. Several schools that mandate direct deposit refunds have participation levels over 95 percent. In any model there will always be few exceptions, but by automating the process the business office is freer to spend time with the few who need additional assistance.
When it comes down to it, it's the students' money. A direct deposit- based refund solution provides them the fastest and least confusing route to money in their bank.
Refund #2: Third-Party Model
Outsourcing refunds to a third party sounds good enough. The campus cuts one big check and the vendor handles everything else. However, unloading this business office hassle can create new ones for students.
Some third-party outsourcers mail debit cards and strongly encourage students to open another bank account just to get their refund money. In the process, students enter screen after screen of personal information and then wade through more than 25 pages of an online agreement with fine print detailing the terms and conditions.
An ACH option is available but requires students to jump through more hoops and encounter more hassles.
Over time, such a model may create a real barrier to student participation and satisfaction. Meanwhile, the refund outsourcer is building a marketing machine for selling banking products and services directly to your students.
Students may wonder why something so simple can be made so complicated. They may even voice their displeasure via social media sites and the blogosphere. It happens. But none of it has to.
Convenience at What Price?
Let's face it - refunds can be a pain. Painful enough to make any solution look pretty attractive.
However, when a college or university outsources the job to a third party, it gives up more than a headache ? it hands over control of a large sum of money and access to its students. When it employs a software-based, direct-deposit solution, everything stays in house and under its control. That's the best solution, because it's a win-win for both students and staff.
In this tale of two refunds, simplicity is the key.