Creating Your Payment Plan Schedule
Payment plan schedules can be used strategically, especially when you take into consideration payment plan durations, down payments, and payment dates.
Consider your academic calendar — when does your semester begin and end, when do your charges post to student accounts, and what is your institution’s policy on payments?
Best practices around payment plan offerings from down payments, enrollment deadlines, and multiple payment attempts.
At least once a year, your account manager will work with you to create your marketing materials and payment schedules. It’s easy to say “just use the plans we offered last year”, but what made your institution choose those particular options? Lots of factors should affect your payment plan durations, down payments, and payment dates. We will follow an example institution through creating their initial payment plan schedule.
The first thing to consider is the basic academic calendar. When does your semester begin and end? When do your charges post to student accounts? What is your institution’s policy on payment?
Once registration has begun and charges are posted, payment plan enrollment can begin. Make sure that your plans process their last scheduled payment before grades are delivered. At the same time, make sure you’re offering your students a variety of options (and open the plans as early as possible). Payment plans with longer durations make monthly payments smaller and more affordable for students and payers.
For example, let’s say an institution (we’ll call it Nelnet University) opens registration on July 1 for the Fall 2020 term. The last day of classes for this term is December 18. Given this timeframe, our payment plans can open July 1 and have monthly payments from August to December. This gives students a maximum of a five payments to cover their balance.
With our Enterprise platform, institutions can set payment due dates to any day of the month. Choose a date that works for your bill and payment dates. If your terms end towards the beginning of a month, you may want to set the due date earlier rather than later. That way, you’re able to collect a student’s final payment before the term ends.
Some institutions like to offer students more than one date option. The more flexibility you can provide, the more successful payment plans will be. You can do so either as students sign up, or allow consumers to change their payment date within designated parameters a few times over the course of their payment plan.
Nelnet University doesn’t want their due date too close to the first of the month. (It’s pretty likely that their students already have lots of bills due on that date.) Since their semesters end around the middle of the month, they also don’t want it to be too late. To account for that, they’ve chosen to set the 10th as their monthly due date.
If you’re offering payment plans throughout the semester, it’s a good policy to collect down payments. That way, late enrolling students are kept on par with those who enrolled early.
For example, if a student enrolled in a five-month fall semester payment plan in August, they were able to do so with no down payment. If another student starts a payment plan in October, the down payment “makes up” for the prior months – equal to what the early enrollees paid.
This keeps everyone on the payment plan at the same percentage over the semester – no matter what option they enrolled with. Down payments also have the benefit of being almost a “test” transaction, to verify the payment method as provided is valid-if a down payment fails for any reason, the payment plan is terminated.
Nelnet University decided to start collecting down payments on their second payment plan option, which includes a 20% down payment and four payments starting in September. They will also offer a 25% down, three-payment option starting in October, 33% down, two-payment option starting in November.
Payment Plan Enrollment Deadlines
Nelnet Campus Commerce requires a buffer of seven business days between a down payment and a payer’s next scheduled monthly payment. Requesting two payments within such a short timeframe negates the benefits of a payment plan and decreases the likelihood of collection.
Since business days change with the yearly calendar, our cutoff dates vary from year to year. Some institutions take advantage of our cutoff calendars, which automatically set enrollment deadlines at the latest possible date. Others prefer to use a static date for each plan.
Make sure your dates are consistent and easily memorable. Talk with your account manager regarding what scenario for enrollment deadlines works best for you.
Nelnet University elected to use the last possible date to enroll as their deadline (following banking regulations to create their cutoff dates).
Multiple Payment Attempts
Banking regulations allow us to process attempts of a single scheduled payment a maximum of three times. Another thing to keep in mind when creating your schedules is how many attempts will be made for each payment.
Once the maximum amount of payment attempts have been reached, you have two options: Set that particular payment aside and continue processing the remaining balance, or terminate the payment plan altogether.
These options can also be different for the bulk of your scheduled plans and your final payment. If your institution utilizes our integration, terminating an agreement can remove the protective hold placed on a student for enrolling in a payment plan and allow your institution to follow your collections policy for students not current on their tuition.
Nelnet University has decided to use a three-attempt schedule for all payments except the last payment, which will only attempt once. They’ve also elected to terminate any agreements that reach that maximum attempt threshold and are still unable to successfully process the payment.
Your current payment plan setup may work well for you and your students, but our system regularly implements enhancements that benefit you and your student population. Check in with your account manager to make sure you’re using our solutions to the fullest and giving the best possible service to your students.