Refund Management

The Student Aid and Fiscal Responsibility Act (SAFRA), passed in May 2010 as part of the Healthcare Reform Act, was an attempt to rein in the student loan industry and save money by taking private lenders out of the equation. But a year later, educators, parents, and legislators are asking, is the program delivering on its goals?

Tuition refunds require intense administrative attention at many colleges and universities. If a student receives financial aid after tuition has been paid, or if he or she drops a course early in the term, schools are obligated by federal law to issue refunds within 14 days.

There are 18 million college students, 40 percent of whom receive federal financial aid every spring and every fall. The average student, after class drops and other adjustments, gets 2.5 refunds totaling $1,300. That's a lot of money and a lot of transactions that have to be made according to a stringent set of regulations.

We have written before about the importance of considering your institution's market position relative to competitors when planning future price increases. When sticker price position is higher than "prestige" position (based on publicly available measures like test scores, U.S. News rank, and selectivity) institutions often see declining demand.

"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.

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.