Automating Finance
Smaller schools—or those with budgets stretched tight—may
only now be evaluating the automation of certain financial processes.
For you latecomers, an updated primer to help you catch up.
IN PAST YEARS, higher ed's financial management side
has been riddled with manual processes and aging mainframe
applications. But today, schools can take advantage
of an array of technologies that automate billing, payment
processing, and refund processing in the case of overpayment.
And the investments are well worth it: Institutions
that wring greater efficiency out of these
financial operations stand to make life
easier for students— and themselves.
Three years ago, Long Island
University (NY) embarked on a
major investment in an enterprise
resource planning (ERP)
system, and recently completed
the deployment of
Oracle's PeopleSoft Campus
Solutions 8.9. Prior to the
rollout of the new system,
the university would generate
multiple bills for a
student attending classes at
more than one campus. (The
school operates six campuses,
and it is not uncommon for a student
to take courses at more than
one location.) Now, however, the PeopleSoft
ERP solution consolidates the
billing. "We united the student ID as a single
source of billing," notes George Baroudi,
LIU's chief information officer. "So, even if students
attend multiple campuses, they now get one bill."
Certainly, the system boosts back-office efficiency but,
overall, the ERP deployment aims to improve student services,
he asserts. In that regard, the school's solution
includes a web self-service portal that lets students track
their accounts in real time. The school's previous legacy
batch-processing system meant that updates on a new meal
plan or the latest financial aid disbursement would show up
in the system about a day after the fact, Baroudi explains.
Next Challenge: Payment Processing
With billing and student account access ironed out,
some schools move on to automate payment
processing. Solutions that enable electronic
payment through such means as credit
cards get campuses out of the paper-check
processing business. Today, in fact, schools
can purchase payment processing as a software
product or hosted service, and the
hosted option is particularly helpful to institutions
with already-stretched budgets. Providers
in the electronic payment processing space
include CashNet, Nelnet
Business Solutions,
and TouchNet.
Some providers may offer both purchase
or hosted options, and most
cultivate alliances with the leading
ERP vendors, facilitating integration
between payment processing and
ERP systems.
Baroudi says administrators and
technologists at LIU are evaluating
eCommerce partners such as Touch-
Net. TouchNet integrates with People-
Soft products as well as other ERP
solutions (the company has been a
PeopleSoft partner since 1999). The CIO
observes that the electronic payment processing capability
will be a welcome improvement at LIU; it will replace
the school's current "sneaker net" process, wherein students
routinely trek into the Bursar's Office to make their
tuition payments.
Managing Financial Aid
Schools also seek to automate the financial aid process and,
today, this component may be integrated into a broader ERP
solution, as well. That's the case for Macomb Community
College (MI). The school recently migrated to release 18 of
Datatel Colleague ERP system, which
includes Datatel Colleague Financial Aid as an integrated
component. "Integration is key," notes Judy Florian, director of
financial aid at Macomb. "The Financial Aid Office now has a
large amount of information [from the core ERP system] readily
available to us, which helps our staff serve our customers
more effectively."
The Colleague Financial Aid module provides automatic
data exchange with the US Department of Education for FAFSA, Pell Payment, and other programs. Florian
says she finds the product's automatic packaging module
(referring to the decision process regarding the combination
of federal, state, and institutional awards for which a student
is eligible) to be particularly useful. Florian also cites Colleague
Financial Aid's satisfactory academic progress calculator
as a helpful feature.
At Long Island University, electronic payment
processing will replace the school's current
‘sneaker net' process, wherein students routinely
trek to the Bursar's Office to make tuition payments.
Handling Refunds
When schools dispatch refunds to students who have overpaid
tuition or have financial aid funds left over after tuition
and room & board are met, students find themselves on the
receiving end of the money flow and, understandably, want
to see those funds as soon as possible.
To remedy this and other glitches, some schools have
opted to offload the refund chore to an outside party, rather
than cut the checks on their own. Troy University (AL), for
example, tapped refund management disbursement provider
Higher One to handle refunds. The
refund management service smoothly disburses funds and
provides students with refund cards. Money due students
may be deposited in a checking account associated with the
card, which can be used as a MasterCard debit card, as well.
Troy University Controller Bryan Helms notes that Higher
One has proven quite a selling point with non-conventional
students who attend classes via the school's distance learning
program. Many Troy students take courses at military
bases (the university offers occupation-related degrees
through distance learning to soldiers stationed around the
world). Students who once had to wait up to a week to get a
refund check in the mail now receive their funds the day a
refund is issued (or, at the latest, the following day). Funds are
transferred to a Higher One card or to a bank account of the
student's choice, via electronic funds transfer, says Helms.
The Higher One approach offers an additional benefit, the
controller adds. Sensitive data— bank account information, for
instance— is housed in the Higher One system instead of a
university system. And while some higher ed administrators
might be hesitant to allow this kind of data to move outside of
the confines of the institution, Helms believes that moving the
data to Higher One actually reduces the school's liability.
As for return on investment, Helms says the Higher One
solution is "cost neutral" over the long term, when comparing
the cost of paying Higher One to provide refund services
versus the cost of preparing checks in-house.
According to Higher One spokespeople, the task of generating
refunds, maintaining payment preferences, providing
customer service, and handling errors can saddle a
school's business office with a good deal of cost.
Sean Glass, founder of Higher One, discloses that one
school told him that the cost per refund payment could run
as high as $30, without electronic processes in place. (He
points out that the school did not offer any electronic
options.) But even schools that do offer electronic options
may not see in-house disbursement costs decline significantly
from manual processes since "the cost is in the
exception handling, not necessarily in the cost of the paper
check and mailing," he explains. Glass says that Higher
One's program handles exceptions for no additional cost;
that is, the vendor does not charge for refunds directed to
a Higher One-related account. Those exceptions sent via
Automated Clearing House (ACH) are market-priced at a
couple of cents. Of course, pricing for check handling
depends on a school's size. But this particular vendor is
"moving to where customers can choose a model wherein
a school can pay a per-refund price of 40 cents— for all
types of refunds," Glass claims.
Other companies that distribute student refunds include
TouchNet and CashNet. ERP products such as PeopleSoft
Student Financials calculate student refunds and provide a
link to third-party payment processors.