A generational change in higher education payment habits

The rise of digital technology has led to a generational change in payment habits. Today’s students, often referred to as Generation Z, are digital natives. They have grown up with smartphones, online banking, and digital wallets. They are accustomed to the convenience and immediacy of digital platforms and expect the same from their educational institutions. As a result, they are more comfortable with digital payments than any previous generation.

Parents, too, are increasingly adopting digital payment methods. Busy schedules and the convenience of online transactions have led many parents to prefer digital payments over traditional methods like cash or checks.

This shift in payment habits has significant implications for educational institutions. Schools and universities must now offer digital payment options to meet the expectations of students and parents.

“At our institution, the shift in payment habits is a significant development. To meet the expectations of our students and parents, we offer digital payment options. If we fail to adapt, we risk alienating our community, which could lead to decreased enrollment and lower satisfaction rates. However, by embracing digital payments, we can improve our administrative efficiency, reduce costs, and enhance the overall experience for everyone involved,” says Matthew Bonill, VP of Enrollment & Student Success, at Touro University.

Institutions that fail to adapt risk alienating their students and parents, potentially leading to decreased enrollment and lower satisfaction rates. On the other hand, those who embrace digital payments can improve their administrative efficiency, reduce costs, and enhance the overall experience for students and parents.

According to a recent PYMNTS article, “53% of school financial leaders say they need to expand their billing and subscription management capabilities, while 7% need to introduce such capabilities in the first place.”¹ This highlights the urgent need for institutions to upgrade their systems and processes to meet the expectations of the digital age.

Colleges and universities admit to wanting a range of other innovations, including real-time access to payment transaction data with new and local payment methods. These innovations can significantly enhance the payments experience for students and parents, making it more convenient and efficient.

“Improving the consumer payments experience is a key focus for us at Pasco-Hernando State College. By streamlining payment processes and offering more flexible options, we can better serve our students and parents. This initiative reflects our dedication to providing a seamless and user-friendly experience, ultimately contributing to higher satisfaction and stronger engagement within our school community,” says Tom Hull, CIO, VP of Information Technology, Pasco-Hernando State College.

So how can educational institutions meet students and parents where they are? Here are a few strategies I have recommended to customers:

1. Offer multiple digital payment options: Institutions should provide digital payment options, including credit/debit card payments, bank transfers, and digital wallets like PayPal or Venmo.
2. Ensure security and privacy: Security is a major concern for digital payments, ensuring they protect user privacy.
3. Simplify the payments process: The payments process should be as straightforward as possible. Complicated payment processes can deter users from making digital payments.
4. Educate users: Institutions should educate students and parents about the benefits of digital payments and provide clear instructions on how to use their payment systems.

ACI Walletron effectively incorporates all my suggestions by utilizing the built-in wallet features across all platforms. This intuitive tool empowers your university to stimulate activity and involvement through smartphone use – promoting the adoption of paperless methods. With a dynamic pass that is always at hand and never misplaced or left behind, it cultivates an unparalleled user experience. Some of its standout features are particularly impressive, allowing users to:

• See a notification when their bill is due.

• Tap to open the bill in the Apple or Google wallet on their phone (the same place airplane boarding passes are stored).

• See how much they owe and the due date.

• Tap to go to the mobile-optimized payments site.
• Make a payment from an existing funding source or add a new one.

Twenty percent of financial leaders on college campuses identified losing too much money to fraud as their top challenge.¹ This underscores the importance of implementing robust security measures in payment systems.

The 2024 ACI Speedpay Pulse Report supports this finding. “Implementing stronger security measures such as customer authentication, identity verification, and fraud prevention tools helps decrease the risk of payments fraud. It’s worth noting that only 19% of consumers change their passwords monthly.”²

Security and ease of use consistently top the list of the most important features for students. Institutions must therefore prioritize these aspects when developing or upgrading their payment systems.

According to PYMNTS’ data, more than 80% of financial leaders at four-year universities are interested in offering flexible payment plans tailored to individual student needs.¹ This suggests a growing recognition of the need for payments flexibility in higher education, which can greatly enhance the affordability and accessibility of education for students.

“Our school is committed to recognizing and addressing the need for greater payments flexibility. By providing more flexible payment plans, we can help reduce financial barriers and make education more attainable for all our students. This approach reflects our dedication to fostering an environment where every student has the chance to thrive,” continued Hull.

In conclusion, it’s clear that the payment habits of students and parents are changing, and institutions must adapt to meet them where they are. By understanding these trends and implementing the necessary changes, universities and colleges can ensure they are well prepared for the future of tuition billing and payment operations.