STUDENT ACCOUNTS RECEIVABLE
This document establishes guidelines for the prudent collection of student accounts receivable in the best interest of Midwestern State University and the State of Texas.
2. POLICY STATEMENT
Midwestern State University is responsible for determining whether an extension of credit in specific cases to students is appropriate and in the best interest of the University.It is the responsibility of the Controller’s office to establish the following:
A. A process to ensure that the requested extension of credit is not a prohibited transaction.
B. A procedure for ensuring that any extension of credit (Installment Plan Contract or Emergency Tuition and Fee
Loan) is done so in a prudent manner, including the use of standardized credit applications and specification of
thelevel of authority required for approval of the requested credit.
C. 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.However, during the pendency of a bankruptcy action, transcripts
shall not be withheld.
D. The billing, accounting, and collection procedures for recording and monitoring the credit extended and ensuring
that the agreed upon payment is received.Such procedures are to include the creation of a reserve for doubtful
accounts in cases of on-going credit extensions, or the identification of non-state appropriated funds to offset any
expenses in other cases.
3. CRITERIA FOR RECOGNIZING AN ACCOUNT RECEIVABLE
An accounts receivable will be recognized (recorded in the University’s financial records) when:
A. a student has enrolled for classes at the University;
B. payment is due to the University from the student/contracted third party;
C. the revenue from the transaction has been recognized in the University’s books and records;
D. thecash payment has not been received (collected) by the University from the student or contracted third party;
E. total outstanding student accounts receivable are deemed by the Vice President for Business Affairs and Finance
to be material to the financial records of the department and thus to the University;
F. the accounts receivable does not represent an extension of credit that is prohibited by law; and
G. the recording is deemed to be appropriate by the University’s accounting officers.
4. RECORDING AN ACCOUNT RECEIVABLE IN THE FINANCIAL RECORDS
An accounts receivable is recorded in the financial records automatically by the registration process.These entries credit the appropriate revenue subcodes on subsidiary ledger accounts and debit the appropriate accounts receivable account controls on the general ledger accounts.
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.The receivable is credited, and the revenue is debited.
5. RECONCILING ACCOUNTS RECEIVABLE
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 by the tenth working day following the monthly close of the financial accounting records.
6. AGING ACCOUNTS RECEIVABLE
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: (example)
Summer I 094
Summer II 010
Summer I 040
Summer II 010
Summer I 040
7. COLLECTING ACCOUNTS RECEIVABLE
The size of the account receivable may influence efforts put into collection attempts.The expenditure of time, effort, and money to collect large accounts receivable (greater than $100.00) is appropriate; however, the same efforts expended on very small accounts receivable (less than $100.00) may not be economical.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:
A. The account balance is at least 181 days old (approximate time semester concludes) and
B. The debtor has not shown any interest (i.e., requested Payment Agreement Form) or indication paying the delinquent account.
0-30 Registration, payment in full is due unless approved for installment Plan (50% ofbalance is due) or Emergency Tuition
and Fee Loan (100% of balance deferred), no statement sent.
31-60 Statement sent requesting payment for Installment Plan and Emergency Tuition and Fee Loan.
91-120 Statement sent requesting final payment for Installment Plan and Emergency Tuition and Fee Loan.
120-180 Transcript and registration holds are placed on unpaid accounts and the student(s) are notified via email.
181-210 First “Past Due” notice is sent.
211-240 Second “Past Due” notice is sent.
241-270 Third “Past Due” notice is sent.
271-360 “Final Notice” letter demanding payment and warning of collection agency involvement if student does not contact
the Controller’s office within 30 days of the date of the “Final Notice” letter.
If a debtor with an account that is at least 181 days old makes monthly payments towards the balance, or begins making monthly payments after “Final Notice” letter has been received, the procedure will be to continue sending monthly “Past Due” notices until the balance has been paid in full.However, there will be a transcript hold placed on the account until the balance has been paid in full and a registration hold will be in place until the balance is paid below $250.00.
Students with accounts that are larger than $100.00, considered delinquent or in default, that have been sent a “Final Notice” and still have made no attempt to contact the Controller’s office to make payment arrangements will be turned over to an appropriate outside collection agency.Collection fees are calculated and added at this time as directed by the Board of Regents.Accounts will also be reported to the Comptroller of Public Accounts authorized by the Texas Government Code, §403.055, to ensure that no treasury warrants are issued to the debtor until the debt is paid.
If a debtor has received a “Final Notice” letter and begins making monthly payments but then stops making them, the debtor will be sent to an outside collection agency without further notice to the debtor.
All demand letters should be mailed in an envelope bearing the notation “address correction requested.”If an address correction is provided by the United States Postal Service, the demand letter should be re-sent to that address prior to initiating 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
A. Accounts receivable up to $100.00 may be written-off by the Controller if all collection efforts have been completed
up to the point where the account would have been referred to a collection agency and the account has been
outstanding for 5 years.
B. Accounts receivable between $100.00 and $1,000.00 may be written off by the Controller if returned as uncollectible
by an outside collection agency and the account has been outstanding for 5 years.
C. Accounts receivable over $1,000.00 must be referred to the Vice President for Business Affairs and Finance for
write-off approval.Requests for write-off should include the name, amount, school term, and a statement as to why
that accounts receivable has been determined to be uncollectible.
D. Deceased debtors.If the debtor is deceased, the delinquent obligation should be classified as uncollectible and
E. 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 Banner system along with a transcript and a registration hold to prevent these persons from
receiving future University services until their balance has been paid in full.
9. FORGIVENESS OF DEBT VERSUS WRITE-OFF OF UNCOLLECTED ACCOUNTS
The write-off of an uncollected account is a bookkeeping entry only and does not absolve the debtor from his/her financial responsibility to the university.Although the uncollected account has been removed from the 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., sue 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 due to an error or because of the student’s death will also have the relevant semester credit purged.
10. ALLOWANCE FOR DOUBTFUL ACCOUNTS
The University accounting department maintains an allowance for doubtful accounts on past due accounts that are less than five years old.Prior to closing each fiscal year’s books, the Controller ages all receivables by term and prepares a schedule that breaks down the receivables by the appropriate general ledger, i.e., tuition receivables, housing receivables, etc.All terms prior to the upcoming fall term are deemed to be 75% uncollectible and an allowance for doubtful accounts is set up as a contra receivable in each appropriate general ledger.The accounting entries to adjust this each year are debits to the revenue accounts and credits to the contra receivable accounts.