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Student Account Receivables (C-59)

Original Implementation: July 15, 2008
Last Revision: None

  1. PURPOSE
    2.

    This document establishes guidelines for the prudent collection of student accounts receivable in the best interest of Stephen F. Austin State University and the state of Texas. Although this policy primarily applies to student account receivables, including certain university issued short term loans, procedures stated herein may be used to process other delinquent receivables from vendors and non-student accounts. This policy does not apply to the write-off of any federal loans.

  2. POLICY STATEMENT
    3.

    Stephen F. Austin State University is responsible for determining whether the extension of credit in specific cases to students is appropriate and in the best interest of the university to do so. It is the responsibility of the controller’s office to establish the following:

    1. a process to ensure that the requested extension of credit is not a prohibited transaction.
    2. a procedure to ensure that any extension of credit (installment plan contract, short term loan request, or repayment agreement) is done so in a prudent manner, including the use of standardized credit applications and legal authority required for approval of the requested credit.
    3. a procedure whereby credit is not extended to students who are in default on other obligations or for whom previous obligations have been written off as uncollectible. If a student account is in default, a transcript and registration hold will be placed on the account.
    4. procedures for recording and monitoring the billing, accounting and monitoring the collection activity on student accounts.
    5. procedures for recording and monitoring credit extended and subsequent payments received on student accounts.
    6. procedures to ensure that amounts reported as receivables on the financial statement are recorded in accordance with generally accepted accounting procedures.

  3. CRITERIA FOR RECOGNIZING AN ACCOUNT RECEIVABLE
    4.

    An account receivable will be recognized (recorded in the university’s financial records) when:

    1. a student has enrolled for classes at the university or has been registered for classes by the university;
    2. a student has incurred charges for costs associated with attendance (housing and meal charges, post office charges, book purchases, etc.) from which a benefit to the student is derived;
    3. payment is due to the university from the student or a contracted third party;
    4. the revenue from the transaction has been recognized in the university’s books and records;
    5. payment has not been received (collected) by the university from the student or contracted third party;
    6. the accounts receivable does not represent an extension of credit that is prohibited by law; and,
    7. the recording is deemed to be appropriate by the university's accounting officers.

  4. RECORDING AN ACCOUNT RECEIVABLE IN THE FINANCIAL RECORDS
    5.

    An account receivable is recorded in the financial records automatically by the registration process. These entries credit the appropriate revenue accounts and debit the appropriate account receivable accounts in the university’s accounting system.

    In the event that a student withdraws during the semester, the accounts receivable outstanding balance is reduced by the appropriate percentage refund rate relevant at the time of withdrawal.

  5. RECONCILING ACCOUNTS RECEIVABLE
    6.

    The controller’s office maintains adequate records of student accounts receivables and prepares a reconciliation of the student receivable records and the financial accounting records following the monthly close of the financial accounting records.

  6. AGING ACCOUNTS RECEIVABLE
    7.

    The controller’s office also maintains an aging schedule for all student accounts receivables with the total of the aging schedule balanced to the total recorded accounts receivable. The following aging brackets are to be used:

  7. COLLECTING ACCOUNTS RECEIVABLE
    8.

    The size of the account receivable may influence the collection efforts. The expenditure of time, effort, and money to collect large accounts receivable is appropriate; however, the same efforts expended on very small accounts receivable may not be economical. Guidelines as to the level of attention and the efforts expended on accounts receivables will be set by the university based on recommendations from collection agencies and management.

    The following steps are conducted in collecting accounts receivable which are delinquent or in default.

    An account will be considered delinquent or in default if the following apply:

    Aging Bracket in Days with Approximate Billing and Collection Activity

    Active Students:

    Inactive students:

    Accounts delinquent or in default in the amount of $10 or more will be turned over for collection. Initially, students will be sent a warning letter from the collection agency. They will have 30 days to respond to this letter and make payment arrangements prior to being subject to collection agency fees. Collection fees are calculated and added after the 30-day warning letter has been sent. These fees will be negotiated in advance with the collection agencies and are subject to approval from the attorney general’s office. Accounts will also be reported to the Comptroller of Public Accounts as authorized by the Texas Government Code, §403.055 to ensure that no treasury warrants are issued or payments are paid to the debtor until the debt is paid.

    If a debtor with a delinquent account makes monthly payments towards the balance or begins making monthly payments within the 30-day window after the collection agency warning letter has been received, the debtor will be treated as an “active’ student and will not be turned over to a collection agency unless monthly payments cease before the account balances are paid in full. However, until the balance has been paid in full, there will be a transcript hold placed on the account. Also, a registration hold will be placed on the student’s account until the balance is $200 or less.

    If a debtor has received a 30-day warning letter and begins making monthly payments but then stops making monthly payments, the debtor will be sent to an outside collection agency without further notice to the debtor.

    All demand letters should be mailed in compliance with applicable collection laws. If an address correction is provided by the United States Postal Service, the demand letter should be mailed to the corrected address prior to the referral procedures described above. Demand should be made upon every debtor prior to referral of the account to an outside collection agency and the attorney general.

  8. WRITE-OFF OF AN UNCOLLECTIBLE ACCOUNT
    9.

    The following accounts may be subject to write-off:

    1. Accounts receivable up to $10, may be written off by the controller if all collection efforts have been completed and the account has been outstanding for 5 years.
    2. Accounts receivable between $10 and $1,000 may be written off by the controller if returned as uncollectible by more than two outside collection agencies (first and second referrals) and the account has been outstanding for 5 years.
    3. Accounts receivable over $1,000 returned as uncollectible by more than three outside collection agencies (first, second and third referrals). Accounts receivable over $1,000 that have not been collected after the third referral must be referred to the vice president for finance and administration for write-off approval. Requests for write-off should include name, amount, school term, and a statement as to why that accounts receivable has been determined to be uncollectible.

    A list of all accounts written off will be filed in the controller’s office and all student accounts that have been written off will be flagged in the student system. Additionally, a transcript and registration hold will be placed on these student’s accounts to prevent these persons from receiving future university services until their balance has been paid in full. Warrant holds placed on the student’s account will not be removed until the balance is paid in full.

    The following accounts will be forgiven and permanently written off, and the student’s account will be marked as paid in full:

    1. Deceased debtors. If the debtor is deceased, the delinquent obligation should be classified as uncollectible and permanently written off after attempts to collect against the estate have been unsuccessful.
    2. Residual amounts as deemed appropriate by the vice president of finance and administration after application of any property deposit, and within guidelines set by state and federal regulations.

  9. FORGIVENESS OF DEBT VERSUS WRITE-OFF OF UNCOLLECTED ACCOUNTS
    10.

    The write-off of an uncollected account is a bookkeeping entry only and does not relieve the debtor from his financial responsibility to the university. Although the uncollected account has been removed from the financial books and records (i.e., written-off as uncollectible), the university may still have a claim against the debtor and may still seek legal remedy (i.e., file suit for collection in a court of law). Therefore, it is the responsibility of the controller’s office to maintain adequate records regarding legal financial obligations (i.e., debts) owed to the university.

    Student account receivables that are forgiven because of the student’s death or because the account balance is considered residual will be treated as paid in full, and records will be treated consistent with other student accounts that have been paid in full.

  10. ALLOWANCE FOR DOUBTFUL ACCOUNTS
    11.

    The university’s accounting department maintains an allowance for doubtful accounts on past due accounts for all accounts that have not been written off or forgiven. Prior to closing each fiscal’s year’s books, the controller’s office will analyze and adjust the allowance for doubtful accounts, with offsets to the appropriate revenue accounts or bad debt expense, in accordance with accounting guidelines. An allowance for doubtful accounts will be set up as a contra-receivable in each appropriate general ledger.

Cross Reference: Texas Comptroller’s Office Fiscal Policies & Procedures (APS 027); Texas Government Code Chapter 2107

Responsible for Implementation: Vice President for Finance and Administration

Contact for Revision: Controller

Forms: None