In September 2023, NACUBO released its 2023 Student Financial Services Benchmarking Report. The report, which explores student financial services operations from top to bottom, highlighted several trends in unpaid student account balances, student refunds, and third-party billing.
Perhaps most compelling was the data on payment channels and methods. It’s no surprise that in-person payment methods are declining. The report shows that the share of dollars via in-person payment methods like card-present credit card transactions, cash, and paper checks fell from 33.2% to 19.6% between FY18 and FY22.
Students are not the only ones moving toward electronic payments. Schools are increasingly using electronic direct deposit to refund credit balances. In that same period, the average share of dollars refunded via electronic direct deposit rose to 69.8% — a 16.6 percentage point increase from 53.2% in FY 2018.
Pain Points in Student Payments
While campus payments seem to be headed in the right direction, student financial services payments are not without challenges. According to a PYMNTS Payments in the Education Space report, the average school has just 2.7% of the yearly budget allotted to payment operations.
As a result, many are managing student financial services payments with legacy systems that can’t keep up with modern needs. These systems are often siloed, making it difficult to track and improve payments experiences across multiple departments, campuses, and functions.
The report highlights some of the primary challenges schools face:
- Roughly 80% of four-year universities find the idea of offering flexible payment plans “somewhat” or “very” attractive.
- Nearly 80% of higher education finance leaders say receiving payments from foreign student loan programs is difficult.
- About 29% of schools view recurring payments as a challenge.
It doesn’t stop there. A 2022 American Express report notes that two in ten college financial leaders say a top challenge is losing too much money to fraud. And 11% of financial leaders report struggling to manage multiple vendor relationships as the top pain point.
Modernizing Student Financial Services Payments
The need to embrace new payments technology is real. Implementing a unified payments system doesn’t just streamline payments across campuses, it provides better tracking and analytics, caters to student preferences, and can ease the compliance burden on individual departments.
Navigating payments technology can be difficult. As the data highlights above, juggling multiple vendors is no easy feat. It’s not insurmountable, however. Working with a partner that has deep expertise in payments technology enables schools to integrate the right technology in the right way. In turn, staff can focus on value-added tasks rather than manual payment tasks that put a chokehold on operations. Reconciliation and compliance can be simplified which translates to a better experience for staff – and students.
Simplifying student financial services payments takes a team with know-how. Arrow Payments has deep payments experience and a proven track record in merchant services support to help optimize your payments operations quickly and seamlessly. For more information on how we can help you transform payments into a strategic stronghold for your institution, contact us today for a free consultation.