Effective Practices : Finances


Billing and Collecting
Finances Section 2

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1. Who is the person/group in your school with primary responsibility for billing parents for tuition and other charges? Attach a position description if available.
2. Does your school allow parents to make tuition payments over time, or is all tuition due prior to the start of the school year? Describe the payment options available to parents.
3. Does your school use any sort of outside billing service to assist in the ongoing collection of tuition payments? Describe how the school bookkeeper interacts with this service, and which tasks are done by the service and which by the school.
4. Are parents allowed/required to use automatic bank withdrawal to participate in the monthly payment plan? Is payment by credit card available? Comment on the effect and implications of these payment options if available. If they are not used, describe why not.
5. What is your school’s policy in cases where tuition becomes delinquent? How does the business office work with parents to resolve these matters, and at what point is the student’s enrollment terminated?
6. Describe the key elements of your school’s philosophy in relation to billing and collecting.
7. What about your school’s billing and collecting process is particularly effective?
8. If there were something you could change in relation to your school’s billing and collecting process what would it be and why?

FIN 2-1

Who is the person/group in your school with primary responsibility for billing parents for tuition and other charges? Attach a position description if available.
In every school surveyed it is the Business Office staff that has primary responsibility for billing parents for tuition and other charges. In larger schools the Business Office is typically staffed by a Business Manager and a full time bookkeeper. In smaller schools the Business Office is more typically staffed by just one person, either a Business Manager or a bookkeeper.

A sample position description for a Business Manager shows that the primary responsibilities of the position include overall responsibility for the financial affairs of the school including ongoing fund management, billing and collecting, processing of accounts payable, budget coordination, and production of financial statements. Other responsibilities in some schools include purchasing, administrative supply ordering and plant maintenance. (See: Business Manager Position Description)

FIN 2-2

Does your school allow parents to make tuition payments over time, or is all tuition due prior to the start of the school year? Describe the payment options available to parents.
All the Waldorf schools surveyed provide a variety of tuition payment plans to parents. These are most typically a monthly ten payment plan, a semiannual plan and an annual plan. One school also offered a quarterly payment plan in addition to these three options.

The usage of these various payment plans varies widely from school to school. One very well established school in an urban setting with many private schools in the area reported that 90% of its families pay on the semiannual plan, and that the remaining 10% take advantage of the monthly payment option. Another well established school in an urban setting in which there is slightly less competition for admission to private schools reports that 30% of its families pay in full at the beginning of the year, 20% pay semiannually, and the remaining 50% choose to pay monthly. It is important for a school to look carefully at its economics, the finances of its parent body, and the practices used by other private schools in its market when determining which payment alternatives make the most sense for its situation.

FIN 2-3

Does your school use any sort of outside billing service to assist in the ongoing collection of tuition payments? Describe how the school bookkeeper interacts with this service, and which tasks are done by the service and which by the school.
Almost all schools use some sort of outside billing service to assist in the ongoing collection of tuition payments. Only one school with relatively modest enrollment handled all of the billing and collecting work internally, and it noted that as the school’s enrollment continues to grow this practice might need revision.

Most of the schools interviewed for the survey use FACTS, a division of Nelnet that serves over 3500 schools, colleges and universities in the area of tuition management. (See: FACTS Website). Editor’s Note: Other Waldorf schools not included in this study use SMART Tuition Management services for billing. Their website is www.smarttuition.com.

In those schools using FACTS a member of the Business Office staff creates a tuition payment calculation worksheet for each family. This worksheet shows all charges and credits related to tuition. This worksheet is used to ensure all items are properly posted to the schools books, and to notify FACTS of the amount to bill each family. In some schools this worksheet is the actual contract that parents sign when enrolling their child in the school. In other cases a less detailed contract is signed at the time of enrollment or re-enrollment and then parents are notified later in a detailed letter of the specific charges and credits that are being posted to their account.

One school that has a very small percentage of its parents paying on a monthly basis allows parents to make payments through Academic Management Services, a unit of Sallie Mae http://www.amsweb.com/about.html. This service allows parents to make monthly payments on the 90% of tuition and fees not covered by the initial deposit. There are 10 payments beginning May 15. There is a $55 one time service fee to the parent and no direct cost to the school; the firm makes it income on the float as it forwards the payments to the school at the beginning of the following month. As a result the firm has a very strict approach to collection in which the contract with a parent is terminated if a payment is missed by 5 days. The school is notified of the default, and no further billing or collecting takes place on that account by the outside vendor. The school does incur a small opportunity cost on funds paid through this service in the form of lower interest earnings.

FIN 2-4

Are parents allowed/required to use automatic bank withdrawal to participate in the monthly payment plan? Is payment by credit card available? Comment on the effect and implications of these payment options if available. If they are not used, describe why not.
Parents that make their payments through FACTS have either their credit card or bank account charged automatically each month. Most parents elect to have their bank account debited automatically each month. Very few parents elect the credit card alternative as there are additional fees associated with this payment vehicle.

One school that uses FACTS noted that there are two cases in which rare exceptions are made to the requirement that all payments be made by bank debit or credit card. Some parents use a business manager to handle their financial affairs, and these situations are sometimes handled via check rather than automatic debit. In a few cases the student’s tuition is paid by grandparents rather than by the parents. Sometimes these older community members are uncomfortable with automatic debits as a concept, and the school will work to accommodate these rare exceptions. When exceptions are made and billing is done on a paper basis rather than through automatic debit then FACTS charges an additional processing fee of $50 for semiannual plans and $275 for monthly plans.

Most schools noted that they have been authorized to also accept credit card payments as a collection tool in cases of account delinquency.

FIN 2-5

What is your school’s policy in cases where tuition becomes delinquent? How does the business office work with parents to resolve these matters, and at what point is the student’s enrollment terminated?
The policy in place at most schools is that when tuition is delinquent 30 days or more a student is subject to suspension. When a payment is missed a letter is sent to the parent notifying him that the student is subject to suspension and requesting a call to the office to set up a payment plan if the account cannot be brought up to date immediately. In the rare instances that an account cannot be returned to a current status schools typically suspend or dismiss a student at the next holiday break or long weekend.

Schools that have converted to the use of FACTS report that FACTS will attempt to clear a payment three times. If all three debit attempts are rejected due to insufficient funds then FACTS sends a notification to the parents and to the school so that the matter can be resolved. Schools also noted that converting to the auto debit feature on FACTS has made a huge difference in their delinquency problems and has significantly reduced the amount of collection work that needs to be done by the school. There is something about a parent knowing that an automatic debit is not going to clear that causes parents to communicate with the school in a way that is quite different from the communication that is lacking when a parent chooses to delay payment on a check that is being mailed in. There is a $25 fee charged by FACTS for payments that don’t go through, and the bank frequently adds its own fees as well.

One school noted that its Board made two policy decisions that have been very effective in the collection area. The first is a requirement that whenever the delinquent balance is $6000 and 90 days past due the Board must be notified. The knowledge that a parent’s financial status will be shared with individuals outside of the business office is a helpful negotiating tool with parents.

The second Board policy is that students with a prior year balance of $1000 or more cannot be readmitted to the school until the account is paid. When account balances are larger than $1000 at the end of the school year the Business Manager holds the year end reports for these students and sends a letter asking parents to come in, settle the accounts and pick up the student’s reports. The school does not hold transcripts on delinquent accounts as this is a violation of state law.

Several schools noted that when parents contact the office to establish payment arrangements in times of financial hardship there is sensitivity to whether a family should be considered for an emergency tuition assistance grant.

FIN 2-6

Describe the key elements of your school’s philosophy in relation to billing and collecting.
The school isn’t healthy unless there is integrity in the school’s financial dealings. The school also works to support parents in their efforts to be equally honorable in their financial dealings with the school, and feels this level of reciprocal respect is appreciated and understood by all members of the community.

While the school expects parents to be responsible with their financial commitment to the school, it also works hard to really hear and to understand when a parent needs a special financial accommodation such as special payment terms or an emergency tuition assistance grant.

Members of the faculty and Board try very hard not to ask of others what they are unable or unwilling to ask of ourselves.

It is critical to memorialize for both parties the exact nature of the payment arrangement that is in place. Everyone involved should be clear on the terms of the payment arrangement.

Make things really clear up front. The contract, grant letters and billings should all be as straightforward as possible so that parents really understand what they are being billed for and when payments are due.

It is important to be disciplined and timely in dealing with delinquencies. This prevents the development of bad habits and ensures that all parents are dealt with fairly. It also allows the school to learn early on if there is a situation that needs special attention and handling by the school.

We have a high level of expectation that parents will make their payments on time. In the past some parents had a sense of entitlement that led them to think that they could make payments when and how they wished, but this thinking is now gone from the community. Today when delinquencies occur it is because there is some real difficulty. It is a privilege for students to be at this school, and parents treat that privilege responsibly.

Tuition assistance grants must be determined on a case by case basis to reflect what people can actually afford to pay and avoid payment problems that are really assistance needs. If the proper grant is given then it is reasonable to expect people to pay promptly. Any delinquencies in this case would then be due to a parent’s unwillingness to pay rather than an inability to pay.

It is important to have clearly established reasonably tight policies in the area of collection and billing. A school should establish options that are reasonable and that help parents to accommodate the costs of private school education, but then enforce those policies in a timely way so that action can be taken before the problem becomes unmanageable.

The key element is having the proper structure - clear timely billings and regular payment discipline.

Active follow up is a key. A school must have mechanisms in place that allow one to manage the billing process and to take appropriate action early on.

Fairness is another key to a sound billing and collecting process. A school needs to be understanding of the particular family’s circumstances, but it must act in a way that is fair to everyone in the school community by collecting tuition that the school is relying on to support the educational program it offers to all students.

In cases of delinquency provide some realistic options - be accommodating where you can so that parents feel met.

The use of an outside service has helped to keep the school at the top of parent’s priorities when it comes to paying bills during cash crunch periods. It is sometimes hard for the business office to be firm with people one knows so well, and using the outside management firm has taken away this burden.

FIN 2-7

What about your school’s billing and collecting process is particularly effective?
Having the outside management company has proved to be a good move for the school. It has streamlined the process of billing and collecting, allowing the business manger to focus on payment difficulties rather than billing and allows her more time for other matters. It has also allowed the school to collect tuition faster.

The FACTS process has meant a fairly low amount of uncollectible debt. The process has legitimacy and parents respect and work within it to meet their obligations.

The tuition protection plan has meant that the school rarely has difficulty collecting unpaid tuition from families when a child leaves the school midyear.

The use of FACTS, and the automatic debit in particular, is highly effective.

We do a good job of staying close to parents if there is a payment difficulty.

The regular letters from the bookkeeper when there is delinquency are effective at keeping parents informed about the consequences of continued delinquency, while the policy of having a child leave only at holiday times is sensitive to the child’s need to not face suspension in the middle of a week or block.

We communicate, we follow up and we try to accommodate real needs.

The Tuition Assistance program is very effective at giving people the right grant amount so that the tuition billed is something that a parent should be able to pay.

Because of this we rarely end up dealing with problems in the collection process that are really a tuition assistance issue.

The monthly payment plan is not a substitute for tuition aid. It is merely a device for allowing people to spread their payments over time to match their cash flows.

The school is quite disciplined in its billing and collecting activities. This discipline starts at the very beginning of the relationship between parents and the school in that a student may not enter school until a contract has been signed.

There is good coordination between the Business Office and the Tuition Assistance committee so that changes in a family’s circumstances can be promptly handed off to the TA Committee for consideration.

The Finance Committee includes among others the Board Treasurer, the Business Manager and the chair of the Tuition Assistance Committee. Their perspectives are important to the committee’s work as it crafts the overall financial philosophies and policies of the school. Their participation in the Finance Committee also helps ensure that the operating practices they implement in their respective areas of operation are aligned with the school’s general financial philosophies.

FIN 2-8

If there were something you could change in relation to your school’s billing and collecting process what would it be and why?
The link between tuition and the teachers’ well being and salary is disquieting. Waldorf education is possible in large part because of the high level of volunteerism by parents, but with increasing tuition levels it is becoming necessary for parents to operate as two-income families. This cost places stress on families and prevents some from participating in the fullest way. Our concern is not about billing or collecting per se, but rather about the impact that finances have on our community life.

We are going to make the FACTS registration happen much earlier in the school year. There has been too much chasing down of these forms late in the school year, sometimes making it difficult to get payment deductions started on time.

Sometimes other priorities cause us to get behind the eight ball on collecting. We need to create plans in a timely way to deal with delinquency problems, and then follow up to ensure that the terms of the plan are being met.


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