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Several public and private schools are now struggling with student debt. This includes both elementary schools and high schools. To minimize accounts receivable, the schools need to have a sound debt collection process in place.
Not all collection agencies can efficiently recover money for schools. An inexperienced debt collector may bring bad PR to the school. Schools have their reputation at stake when they hire a third-party collection agency. Therefore collectors have to be amicable, respectful yet firm with their approach.
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Parents are very sensitive when the matter is related to their kids. When they realize that a professional collection agency is involved in the context of their children, they will attempt to clear these past due bills at the earliest.
The most common school debts are tuition fees, lunch debt, textbook rentals, laptops, student health, technology fee (broken iPad or Chromebook), meals and lab fees. Collection agencies should keep costs low or offer special packages designed just for schools. Debt collection for public school districts and private schools involves a lot of patience and persistence.
Collection agencies effectively collect money from those families who can pay but simply avoid paying their legally due obligation. No need to write off your bad debts when a professional collection agency can collect them.
Communicate the fees structure clearly to parents at the beginning of the school year. Provide them with detailed information on what is expected and when payments are due. Offer financial counseling services to parents who are struggling to make payments. Help them understand the importance of education and how they can manage their finances to fulfill their obligations. Offer flexible payment plans for parents who might have difficulty paying the entire amount upfront. This could include installment plans spread over the academic year.
The debt collection methodology for schools is very different from standard recovery methods. Collection agencies cannot use the same aggressive approach they use to recover money for doctors or small businesses.
Although the school debt crisis is happening all over the USA, some school districts of California, Florida, Texas, New York, Pennsylvania, Indiana, Michigan, New Hampshire and Maine are particularly distressed due to the non-payment of fees by parents. Students’ lunch debt is particularly troublesome for public schools. Colleges have a tuition loan problem.
They should provide a variety of payment options to parents. Agencies should also explain to parents the consequences of late fees. Send communication multiple times before the payment due date (email, SMS, messaging, etc.). To minimize accounts receivable, schools themself should adopt a friendly, proactive, and sympathetic approach before forwarding the accounts to a collection agency.
Many parents send their kids to private schools and draw private elementary school loans. Usually, middle-class families take primary school loans to pay for private education if they cannot afford it.
There is a huge difference when a collection agency contacts debtors versus when the collection is done under the school’s name. Debtors understand that collection agencies will take many legally compliant actions to recover the debt and will not quickly back off. Collections must be done diplomatically. Therefore it is essential to contact the students or their parents to settle overdue accounts.
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