New Study: Half Of AR Chiefs In Education Sector Want Schools To Digitize Payments

That the pandemic dealt a blow to education writ large is without question. And while some colleges and universities actually saw enrollment rise during lockdowns and pivot to distance learning, the global health crisis generally hurt enrollment and tuition payment methods that in many cases were outdated and, not to be glib about it, too old-school to make a difference.

The new Smart Receivables Playbook: Rethinking Tuition Payments In A Time Of Transformation, a PYMNTS and Flywire collaboration, analyzes how colleges of every kind can (and are) streamlining enrollment and tuition payments — including cross-border transactions made by foreign students studying in the U.S. — and lowering barriers to higher education.

Using data from meticulous surveys of finance leaders in key verticals including technology, healthcare and education, along with adjacent experts, the Playbook states, “Students and their families are weighing their options, a natural response to the past year’s tumultuous events,” and adding that “these circumstances illustrate why flexibility has become important for school admissions and finance teams aiming to accommodate and support the shifting educational goals of changing and diverse student bodies.”

The Playbook also notes, “The financial strains created by the pandemic have intensified many of these challenges. Every education institution surveyed in the Payments 2021 study indicated that they had to return some portion of tuition and fees during the 2020 academic year, with most estimating they refunded on the order of 5 to 20 percent.”

An Education In Transformation

Evaluating payments predicament among colleges, the latest Smart Receivables Playbook notes that “educational institutions are already devoting substantial resources to their payment operations. The average school spends 2.7 percent of its annual budget just on payment operations, including payment processing, and one-third of institutions spend three to four percent of their budgets in this way.”

Much can be traced to outmoded payment methods including paper checks for tuition, but in the pandemic era it’s more to do with transforming the accounts receivable (AR) function. That translates to “automation” in 2021 — a class that some administrators may want to enroll in.

Per the Playbook, “One major shortcoming appears to be real-time insight into payments and accounts. Half of school financial leaders say they need to either add or enhance real-time access to payment transaction data as part of their strategic objectives. This relates to two other goals: expanding payment methods that are accepted (cited by 40 percent of school financial leaders) and real-time payments (cited by 35 percent).”

See also: Smart Receivables Playbook: Rethinking Tuition Payments In A Time Of Transformation

AR Automation Goes To College

Graduation day for finance departments throughout the higher education spectrum is looming in a way, as many of these professionals grasp the issues and are taking remedial action.

“AR is moving from being a back-office function that is dealt with after customers and clients sign on the dotted line to serving vital strategic roles in organizations,” the Playbook states.

“Digital technology is weaving together the various components of customer acquisition and retention, including payments. The education space is not immune to these trends, especially in the current social and economic environment, where the college experience is trending toward becoming digital-first.”

The proof is in the data, which finds that over 80 percent of financial leaders at four-year universities “find the option of offering flexible payment plans tailored to students’ individual needs attractive, including 21 percent that find such services very attractive.” At two-year and community colleges the pull is even stronger, as 95 percent of them reporting being “at least somewhat interested in such services, including 21 percent that find them very compelling.”

Read more: Smart Receivables Playbook: Rethinking Tuition Payments In A Time Of Transformation