Payment Plans: Design is Crucial for Utilization

Amy Jenkins
February 15, 2024

Going to college sparks a lot of emotions and while most of them are positive, paying for college triggers more stress than joy.  College was never really inexpensive, but it feels different now and today’s rising tuition costs combined with countless stories about the debt crisis can cause panic in even the calmest of students and families.  And when that first bill arrives, with its many zeroes, many students report feeling overwhelmed, worried and consumed with the thought “How can I pay that much money right now?”

Payment plans exist as a partial answer to that question.  Payment plans enable students to divide their tuition, fees, and other expenses into smaller, more manageable payments.  In theory they make it easier for students to afford their education without feeling overwhelmed by big bills all at once so you would assume many students take the option.  In practice, utilization of payment plans is low with some schools reporting less than 50% of students using them and few schools reporting more than 20%. 

Getting more students onto payment plans can have significant and positive impacts on the individual students as well as the school.  For students, breaking the expenses up often helps them to avoid late payments which can lead to late fees or holds on registration.  For some students, a payment plan will even help them avoid the further down the line consequence of collections or being forced to drop out.  For institutions, students on payment plans can result in more stability and less chasing of students.  But in many cases, the structure and design of the payment plans themselves make increasing usage a big challenge.

So what exactly constitutes a user-friendly payment plan, and why is it so pivotal?

First and foremost, ease of setup is paramount. The process of enrolling in a payment plan should be straightforward and intuitive.  A student should be able to do it from their phone – and the less clicks the better. Students already juggle myriad responsibilities, from coursework to extracurricular activities; burdening them with convoluted payment procedures only adds unnecessary stress. By streamlining the setup process, colleges can empower students to take control of their finances with confidence and ease.

A user-friendly payment plan should incorporate features designed to enhance convenience and accessibility. The ability to set up autopay or securely save payment information can significantly streamline the payment process, ensuring that students never miss a deadline due to forgetfulness or oversight. With autopay, funds are automatically deducted from the designated account, sparing students the hassle of manual payments and reducing the risk of late fees or penalties.

Finally, a well-designed payment plan should exhibit flexibility and adaptability to accommodate the dynamic nature of academic life. Students often find themselves adjusting their course schedules, whether by adding new classes or dropping existing ones. Payment plans should automatically rebalance to reflect these changes, ensuring that students are charged accurately and transparently. And it is crucial to keep students engaged and informed: proactive notifications regarding payment deadlines, changes in the plan, or other relevant updates can help students avoid surprises and manage their finances effectively.

It is not enough to simply have a payment plan – schools need a plan that students understand, can easily access, and want to use. By prioritizing ease of setup, convenience, flexibility, and proactive communication, colleges can empower students to navigate the financial complexities of higher education with confidence and resilience. With well-designed  payment plans we can support students in achieving their academic aspirations while decreasing their financial hardship.

Reach out to learn how Meadow Pay's student-friendly design increases payment plan utilization.

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