Forgiving students’ unpaid balances boosts persistence and revenue

Expert Insight

Forgiving students’ unpaid balances boosts persistence and revenue

Every term a small but noticeable share of students are blocked from registration or purged from their course schedules because of an unpaid bill. In the best case scenario, these students are able to pay their balance and re-enroll in the same semester. However, they will often encounter serious obstacles: The courses they need are full, delaying on-time completion and prolonging financial burdens should additional semesters be required.


Size of average unpaid bill as share of total net price (Georgia State University)


Share of undergrads dropped for non-payment per term (contact institution average)

All too often, students purged for unpaid balances never return. In one study of California stop-outs, only 37% of students who left school intending to return ever did so. This phenomenon is especially troubling given that students can often pay most of their bill; at Georgia State University, for instance, students can typically pay over 80% of their balance.

Consequently, due to a few hundred dollars being owed, significant numbers of students who would have otherwise persisted are lost forever. For these students, a small balance sits between them and graduation, while institutions, instead of receiving most of what is owed, lose the potential revenue from the students who stop out.

Unpaid balances: A risk taxonomy

The most effective solution is to “grant away” the balance, allowing students to persist. However, the existence of an unpaid balance is not, in itself, an indication of financial crisis. To help institutions triage their resources to the students who need them most, we’ve categorized three types of balances based on their associated risk:

1. Quick fixes: Most balances arise from procrastination on the student’s part or simple unawareness of payment deadlines, and are resolved easily. Many of these balances are the result of unpaid parking tickets, library fines, or laboratory supply fees. However, these seemingly innocuous fines can result in otherwise on-track students getting purged from their schedules.

2. Manageable risk: Larger balances may have more complicated causes, such as a student waiting for a payment by a family member or another third party. These students may need to establish payment plans or consult with financial aid professionals, but ultimately will pay their bills.

3. Threats to enrollment: Students who are aware of their bill but are unable to pay it. These are largely low-income students who face the purge regularly.

Three strategies to mitigate risk

1. Setting student-friendly balance thresholds

To minimize stop-out risk for otherwise on-track, low attrition-risk students, institutions should institute policies that proactively deal with marginal balances, such as balance thresholds. Institutions can identify a range of the most common minor balances to determine a suitable threshold. For instance, Tiffin University, a small master’s university, has a balance threshold of $1,000, while a large public research university has a threshold of $200. Students with balances who fall below the threshold can maintain their course schedules or register for classes. To prevent students from leaving without paying their bills, schools can place holds on transcript requests or applications for graduation.

Reported Bursar Hold Thresholds at Select Institutions

Reported bursar hold thresholds at select institutions graph

2. Risk management through segmented outreach

Institutions should have an outreach plan that builds hold awareness in the low-risk population, but involves more intrusive tactics for the students most at risk of financial attrition. Minor holds can be dealt with through mass email campaigns, freeing up staff time to help students with more complicated cases. At the end of the outreach campaign, those students with remaining balances are also likely to need financial assistance.

Heading Off Stop-Out Risk Using Segmented Outreach

Heading off-stop out risk using segmented outreach chart

3. Proactively identifying candidate for balance forgiveness

Instead of relying on applications, institutions should proactively select students for balance forgiveness based on financial need and input from advisors. This prevents the selection bias associated with any application process, assures funds are going to students with unmet need, and limits the chances that students will game the system. Additionally, at Georgia State University, seniors are given preferential awarding status, since this maximizes the likelihood of a completion and minimizes the possibility of a re-award.

Panther retention grant selection criteria:

  • Student must have unmet need
  • FAFSA completed
  • Eligible aid exhausted
  • On track to graduation (senior status preferred)
  • Advisor recommendations

A win-win solution for students and institutions

Georgia State’s Panther Retention Grant program has seen enormous success, with $3 million in net-tuition revenue preserved since the program started in 2011. GSU has demonstrated that forgiving small unpaid balances is a revenue positive practice that helps students graduate.

Increasing revenues, promoting completions


Net-tuition revenue preserved since 2011


Graduate within two semester


Require additional awards

Implementation at your institution

Balance forgiveness is both a staff- and time-intensive process. Depending on your institution’s staffing and financial resources, Enrollment Management can work with the Bursar office to implement one or more of the strategies outlined here to address the different types of balances and levels of stop-out risk. By integrating unpaid balance forgiveness with student-friendly balance thresholds and segmented outreach, institutions can reduce time spent resolving minor balances and invest in helping those most at risk of financially related attrition.

Get more insight on this topic

Administrators across higher education have been calling student success a “top priority” for years, but pressure to improve success is growing. This study documents perspective and best practices on how enrollment managers across public and private institutions are linking financial aid to student success.

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