Office of Fiscal Services

ASUCH Meeting – April 01, 2009

Online Tuition and Fee Payment Options

A. Background

Approximately 80% or 1,000, of Hastings students pay their tuition and fees with financial aid. For the remaining 20% or 250 students, the College currently does not accept credit cards for the payment of tuition and fees; it only accepts cash and checks by mail or in person.

Based upon informal student feedback and the recent economic situation, the College believes students want and/or need tuition and fee payment options in the form of an e-Commerce solution which will provide them with:

1) alternative methods to pay tuition and fees and

2) a convenient method to pay for tuition and fees

B. Proposed Solution

The College’s student and financial software provider, Datatel/Colleague , offers such a solution which interfaces with WebAdvisor . This means that students will be able to make an online tuition and fee payment 24/7 using the same system they currently use to register for classes and view their tuition and fee invoice.

The payment options available include:

4) American Express 5) E-check – E-checks allow for students to pay their tuition and fee balances by electronically deducting the payment from the student’s designated checking or savings account.

This is not the same as using your “check card” or “debit card” to make a payment. Students will need to know the bank account and routing number of the account from which the payment will be deducted (that may or may not be the same bank account number from which debit or check card payments are deducted).

Additionally, students will see their payment on their tuition and fee account in real time.

April 01, 2009

C. Costs of an E-Commerce Solution

The College will incur various costs to implement e-Commerce. The costs for accepting credit card transactions are significantly more than the cost of accepting e-check transactions. These are described below.

On average, the College is expecting to pay 1.75 to 2.5% on each credit card transaction. Conservatively, this translates into an additional operating expense of $70,534 per semester or $141,067.50 per year in credit card interchange and processing fees.

250 students x $16,122* = $4,030,500 $4,030,500 x 1.75% = $70,533.75

*16,122 = estimated resident fees – per semester for 2009-10.

The College will incur the following costs to implement e-Commerce:

1) License Fees - Upgrading the Datatel/Colleague software to support e-commerce is a relatively low cost of $2,700.

2) Credit Card Interchange and Processing Fees – Following is a description of the various interchange and processing fees Hastings will be assessed for each credit card transaction.

a.

Payment Gateway Fees – PayPal is the payment gateway and will charge the College one tenth of one percent (.1%) for each credit card payment.

b.

Card Issuer Interchange Fees – The card issuing entities (i.e., Visa, MasterCard, American Express, and Discover Card) will charge these fees to the College. These fees range from 1.5% to 2.0% with added per item transaction costs ranging from $.05 to $.25.

Interchange fees vary by company. They are based upon several factors including:

• Business sector,
• Volume of sales,
• Average transaction amount,
• Type of card presented by the customer (i.e., if the card used offers the cardholder a high level of rewards such as miles, cash back),
• Level of risk associated with the transaction etc…

c. Merchant Bank Processing Fees – Wells Fargo, as the merchant bank, will charge the College various credit card processing fees. These fees are being renegotiated with Wells Fargo but are currently set at .23% of each credit card transaction.

April 01, 2009

3) E-Check – The costs for processing an e-check transaction is substantially less than the cost of a credit card transaction. The estimated annual fee for processing e-check transactions is $500 and $.50 per transaction. The College considers these costs to be nominal and insignificant to its total operating cost structure.

The primary reasons for these cost variances include:

• With an e-check, funds must be available in the designated account, no credit is extended.
• E-check transactions are processed through the National ACH Association (NACHA) network operator (the Federal Reserve).

4) Payment Card Industry Security Standards Compliance (PCI-SS) – These are costs the College must incur to comply with the security standards imposed by the payment card industry. These standards are required in an effort to minimize fraudulent transactions.

The attached provides a summary of the PCI goals and requirements of which the College is expected to comply. The more credit card transactions an entity processes, the higher the standards required for compliance.

As of this writing, the College does not anticipate that it will need to add new staff or expend

other significant resources to address this compliance requirement.

D. Cost Remediation

The College is dedicated to keeping its operating costs low while providing students with service levels they expect. Because tuition and fee payment options are generally “needed” by only 20% of the students, the College will offer the e-Commerce solution on the premise that the users will pay for the costs.

More specifically:

1. E-Check – No Charge to the user.
2. Credit Card – The College will charge a convenience fee to those who opt to pay their tuition and fees with a credit card. The convenience fee has yet to be determined and will be assessed annually.

April 01, 2009

Under this model, the user of the service will pay for some or all of the costs associated with the credit card payment options.

Note: By charging a convenience fee, the College may be unable to offer VISA as a payment option. The College is still reviewing the VISA merchant card rules in this regard.

E. Additional Information

During the presentation at the ASUCH meeting, students ask numerous questions. The following is an attempt to summarize and address those questions.

1.  
   1. The College is concerned that offering credit cards as a payment option will overextend the financial resources of students. A statement was also made about the fact that even when a student uses a rewards card, such high carrying balances or high transaction charges as those of tuition and fee payments may disqualify the cardholder from receiving the rewards.
   2. As part of the E-commerce rollout, an FAQ related to consumer credit issues will be prepared and made available to students.
2. Students who use their credit card to pay a tuition and fee balance and then subsequently receive financial aid or any other source of funding and are due a refund, the refund will be credited back the credit card.
3. The College will reconsider its late penalty fees in light of providing students more payment options.
4. The College will continue to support two credit card payment systems: one for all student accounts receivables (i.e., McAllister Tower rent, tuition and fees, lab fees) and one for all other transactions such online giving, symposium registration, enrollment and housing deposits. We expect that the Datatel/Colleague software will be modified in the future to handle enrollment and housing deposits.

April 01, 2009

1. Students who currently pay their McAllister Tower rent using a debit or credit card will use the new e-Commerce system and will be subject to the same convenience fees as those who are paying for their tuition and fees with a credit card. To avoid these fees, students who pay with a debit or check card should instead chose the e-check payment option. The difference being that they will enter their bank account and routing number on the payment page (not their debit / check card number).
2. The College expects that students will use the credit card option as a bridge to pay their tuition and fees when they are unable to secure the full amount of financial aid—due to the maximum borrowing levels they have reached or their inability to secure credit-based loans. The Director of Financial Aid is well aware of these students and is a strong and continuing advocate of securing funding to help address this shortfall.
3. The program whereby students have their McAllister Tower rent automatically deducted automatically from their checking or savings account will be phased out. This payment option will be replaced by the e-check payment option.
4. By offering additional payment options, students can pay their tuition and fees and no longer be subject to holds on their student account preventing them from preregistering them for the next semester.

Prepared by: D. Tran, Controller, UC Hastings College of the Law April 01, 2009

trand@uchastings.edu

Six Goals, Twelve Requirements