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Guest Blogger: Nathan Lemon – The High Cost of Checks

May 18, 2010 by Dave Cook · Leave a Comment
Filed under: Prepaid Resources, Student Refunds 
Recently I attended a conference in San Antonio with several higher education institutions in attendance.  During one of the breakout sessions, there was a point made by the moderator about the cost to the colleges for issuing checks to students for various disbursement reasons.  He estimated that the cost was somewhere around $15 per check.  The group in attendance quickly spoke up, saying that the cost of issuing checks was much higher, somewhere in the ballpark of $30 to $40 per check.

What makes issuing a check so costly for these schools?  Some points to consider:

  • Administrative time required by those involved in getting the checks issued
  • Postage required for issuing multiple checks throughout the school year
  • Support resource required to hand out the checks (if they don’t mail them out)
  • Returned checks – Students moved and they don’t update their address information with the school
  • Risk of non-compliance – Resource time, availability of good information and mailing time can impact a school’s ability to meet state and federal disbursement requirements

What else is missing from this list?

Obviously, any electronic method (Debit cards, direct deposit, etc) will speed up the process and will almost always be cheaper for a school.  Given that the majority of students don’t have a direct deposit option (i.e. checking accounts), a debit card solution makes perfect sense.

A prepaid debit card program can reduce or eliminate the costs as compared to cutting checks.  Here’s how:

  • Electronic disbursements allow institutions to streamline their processes and maximize the time of their resources
  • Cards are issued prior to a disbursement and they are reloaded electronically, paying for postage only once is an immediate savings
  • Once the card is in the students hand, returned mail becomes virtually non-existent
  • No more waiting to get the checks to the students, making compliance that much easier to achieve

Nathan Lemon is Director of Higher Education for Springbok Services and will be a frequent guest blogger.  Please visit Nathan’s blog at http://www.highereducationdisbursements.com

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