In a perfect world, no account would go to collections. Students would pay off their debts on time and in full and graduate with a clean slate. Unfortunately, we don’t live in that perfect word, and student debt is one of the most pressing issues facing our nation. According to the Federal Reserve, Americans now have more than $1.4 trillion in unpaid education debt, and bursars’ offices are working to find ways to reverse that trend. Here are four student collections warning signs to look for in your students that can indicate they’re headed in the wrong direction.
Consistently late payments
One of the first things that happens when a student starts to fall behind on their obligation is the payments they make are consistently late. While these students pay their bills, they do so well after the due date, often without realizing how much this can drain their resources. This can be an indicator that they are not prioritizing this bill in favor of other options. It’s important to reach out to these students to remind them that paying their bills on time will help them graduate with little to no debt as they start their new lives. Outsourcing early delinquencies, combined with offering financial literacy resources, could help your school and your students see both short- and long-term gains.
Drop off in communication
Another warning sign that they’re sliding towards student collections is a drop in communication. Students stop answering phone calls, are unresponsive to letters, and are generally trying to avoid an increasingly uncomfortable situation. When this happens, it’s time to get creative. Text outreach programs allow schools to easily contact batches of students ahead of due dates. Email is another viable solution. Often, that personalized communication can make the difference between an account falling into delinquency and one that stays current.
Contingent / broken promises
Make sure to watch out for contingent or broken promises. This usually comes from students who want to pay their bill but lack the immediate means to do so. Contingent promises – “I’ll pay you when I get paid next week” – often lead to broken promises, which lead to delinquency. When making payment arrangements with a student, deal in specifics—how much they’ll pay and when. Offer to call them when the contingency has passed. Stay in close communication to increase the chances they’ll keep their word.
Weird excuses for non-payment
This is the billing equivalent of “the dog ate my homework!” While the unexpected can certainly delay a payment here or there, pay attention to students who make a habit of making excuses for paying their bill late time after time. Debt is a difficult thing to deal with and students – particularly younger students who are still getting the hang of adult responsibilities – may sometimes shy away from that uncomfortable obligation. Take a consultative approach. Help your students understand the seriousness of debt and why they should want to avoid being sent to collections.
Schools that include financial literacy resources, coupled with a personalized, multi-pronged outreach to their students, are not only helping them avoid collections but also are better equipping them to thrive in the real world. While there isn’t a magic bullet that will prevent every account delinquency, taking these proactive steps help guide a lot of students away from collections, allowing them to focus on their studies and ensure their long-term success.