Research indicates that higher education institutions are swimming in past-due receivables, with most colleges and universities carrying more than $1 million in unresolved student accounts. What’s more, every institution uses different processes and strategies (to varying degrees of success) to recoup past-due tuition and fees.

This year, we set out to speak with as many institutions as possible to understand where they’re seeing gaps in process, how their staff manage the workload of resolving past-due accounts, and how their students fare in the process. We surveyed more than 150 higher ed leaders, spoke at conferences all over the country, provided demos and consultations, and dug deep with bursars, student account leaders, and receivables teams to understand their pain points.

We found that many institutions have questions about accounts receivable (AR) management, particularly regarding pre-collections processes. While nearly all (72%) institutions use a third-party collections agency for accounts that they don’t have the time or resources to resolve internally, too few have strategic pre-collections support in place to proactively support students before the collection agency step.

Below, we’ll address the most common questions and misconceptions about managing past-due student accounts BEFORE involving collection agencies.

1. "Won't aggressive collection efforts harm our relationship with students?"

Student satisfaction is more important than ever, and institutions understandably want to provide a white-glove approach when sensitive student finances are concerned. While negativity can be associated with collections, today’s pre-collections approach focuses on early intervention and student success. Through personalized communication and flexible payment options, pre-collections actually helps maintain positive relationships by preventing students from facing more serious consequences like being sent to collections or being unable to register for classes or receive transcripts.

2. "Our internal processes are sufficient – why do we need a specialized AR management solution?"

While internal processes might work for current accounts, past-due AR management requires specialized expertise and dedicated resources. Most institutions shared with us that their staff is already stretched thin, and managing past-due accounts requires significant time and expertise in compliance regulations. A dedicated AR management solution can automate many processes while adhering to applicable state and federal regulations.

3. "Isn't it better to wait until accounts are severely past-due before taking action?"

This is a costly misconception, and one we hear often. Because the likelihood of recovering past-due balances decreases significantly with time, we recommend institutions begin outreach to past-due accounts immediately after the add-drop period. Early intervention can help students address financial challenges before they become insurmountable, increasing both recovery rates and student retention.

4. "Won't implementing a new AR management system be too complex and disruptive?"

Modern AR management solutions like RecoverySelect are designed to integrate seamlessly with existing systems and workflows. The implementation process is typically streamlined and can actually reduce complexity by automating manual processes such as student outreach, payment posting, and collection agency placement if needed, and provide better visibility into accounts receivable status.

5. "We're concerned about compliance risks with increased collection efforts."

This concern highlights the value of a trusted third-party AR management solution. Specialized platforms are designed with built-in compliance controls and are regularly updated to reflect changing regulations. By using a tool like RecoverySelect, institutions ensure the content, quality, and cadence of student outreach follows industry standard practices, ultimately reducing compliance risks compared to manual processes or general-purpose communication tools.

6. "Our past-due amounts aren't large enough to justify a dedicated solution."

Even relatively small past-due amounts can have a significant cumulative impact on an institution's financial health. Our survey found that while most institutions only carried between 10 and 20 past-due accounts each term, many still saw the total balance tip into the millions. Moreover, early intervention through pre-collections can help prevent small balances from growing into larger problems. The return on investment often comes not just from recovered funds, but from reduced administrative costs and improved student retention.

7. "Students who haven't paid their balance probably won't respond to outreach anyway."

This is simply false. Our experience reveals that most students want to stay in school and earn their degrees. Many students with past-due balances simply need clear communication and manageable payment options. Many are unaware of available payment plans or financial aid opportunities. Proactive, supportive outreach often results in positive outcomes for both the institution and the student.

Effective AR management is about more than just collecting past-due balances – it's about supporting student success while maintaining institutional financial health. Solutions like ECSI’s RecoverySelect provide a balanced approach that benefits both institutions and students. By addressing past-due accounts early and professionally, colleges and universities can improve recovery rates, reduce administrative burden, and help more students stay on track to complete their education.

Learn more about RecoverySelect, or schedule a demo, today.