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Partners in collection: Higher ed third-party solutions

Colleges have somewhere to turn for help when internal efforts to collect tuition don’t work
University Business, April 2017

“The last thing colleges want to do is put a former student in collections,” says Harrison Wadsworth, executive director of the Coalition of Higher Education Assistance Organizations. But when internal efforts to collect tuition don’t work, it’s important to have somewhere to turn for help.

At Texas Tech University, the finance office pursues unpaid balances for the most recent term for up to four months, says Christine Blakney, managing director of student business services at Texas Tech. Then the accounts are turned over to third-party collection partners.

“They often have better resources for finding these students and they also perform the credit reporting to credit bureaus, which is an additional incentive for the student to pay,” she says.

Institutions that work most effectively with outside agencies treat those agencies as partners rather than simply vendors, says Chad Echols, a Rock Hill, South Carolina-based attorney with higher ed collections experience.

He recommends informing collections agencies about an individual student’s circumstances to better equip them to collect the balance. “Agencies have a better chance of collecting by meeting the students where they are rather than by treating every case the same,” Echols says.

For instance, it may be wiser to spend more resources pursuing payment from students who have a history of paying their bills and have hit a rough spot, rather than a student with a low balance and little evidence of ability to pay, Echols explains.

Some institutions have had success with state-sponsored debt collection services. For instance, Johnson County Community College in Kansas has collected on several outstanding balances through the Kansas Setoff Program for State Agencies, which collects from debtors’ state income tax refunds.

Kutztown University of Pennsylvania also uses a state-run process, which requires that all delinquent accounts over $100 be sent to the Pennsylvania State Attorney General’s Office for collections, says Wendy Pursell, director of the university’s Office of Student Accounts.

The state collections process can take up to two years, and if the debt is still uncollected, the university will turn it over to an outside agency.

Working with an outside agency is usually a last resort for campus leaders because they’re focused on preserving a relationship with their students and alumni, but if other approaches don’t work, it may be necessary.

When it is, a collections provider that understands the student’s situation and the school’s priorities will make the best partner, Echols says.

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