Capturing Alternative Revenues

Strategic Lessons and Compendium of Tactics for Increasing Nontraditional Operating Revenue

Topics: Administration and Finance, Transportation and Parking, Auxiliary Enterprises, Space Utilization, Facilities and Operations, Revenue Enhancement, Alternative Revenues

Imperative #1: Capitalize on Student Demand for Convenience and Flexibility

Considering Credit Card Convenience Fees

To achieve the first imperative in successful revenue growth, colleges and universities should tap into student desire for speed and convenience. Students are often willing to pay premiums for greater flexibility or speedier service, summing to meaningful dollars for the institution.

Credit card fees are one example. Several institutions have implemented convenience fees for students paying tuition by credit card. Fees are typically 2.5% to 3%. This covers credit card companies’ transaction fees and creates some additional revenue for central priorities. Fees will decrease overall credit card use, but many families are willing to pay the fee for the added convenience and personal bonus points. Institutions that have pursued this approach also recommend explicitly stating how funds will be used and listing other institutions with similar fees, especially those in the same geographic area.

Because of contract and state laws, institutions hoping to apply a convenience fee must use a third-party vendor. This allows the vendor to technically apply the fee, rather than the bursar. Otherwise, the institution must apply the same fee to all payment types, including check and electronic debit. Note, as of this writing, Visa does not permit third-party vendors or convenience fees.

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De-Averaging Fee Schedules

More Institutions Basing Fees on Convenience and Service

Other fees that capitalize on student desire for convenience and flexibility are shown here, along with sample amounts. Obviously, all institutions are reluctant to raise tuition and fees in general. The advantage of these fees is that each is opt-in, administered only to students who tap a particular service, not the entire student body.

The first set of fees charge students for convenience or preference. Many students are willing to pay extra for moving in early or taking courses at peak times. While leaders are understandably wary of exacerbating income disparity among students, some institutions are willing to pursue this approach, especially if they can deploy a portion of additional revenue toward aid for lower-income students.

The second set of fees is designed to share with students some of the costs of their poor or casual planning, such as late drops or lost ID cards. Colleges and universities using this approach must ensure they also provide ample communication and education on appropriate policies and deadlines.

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Recalibrating Offerings to Meet Student Need for Speed

NYU Intersession Geared to Help Own Students Get Ahead

Beyond direct fees, institutions can also leverage student demand for flexibility and convenience as a differentiator and competitive advantage.

As an example, NYU recalibrated its intersession toward already succeeding students working to graduate early and away from the traditional focus of students trying to catch up. This included a shift in course offerings from general education to high-demand prerequisites and an increased focus on experiential learning that would be impractical during the year. NYU also placed limits on how intersession courses could be used to repeat coursework, maximizing the number of seats for their new target audience of students pursuing early graduation.

The combination of these changes led to immediate enrollment and revenue growth among existing students.

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Competing on Convenience

Wichita State Prioritizes Efficiency in International Admissions

Perhaps surprisingly, speed and convenience are two of the most important levers in international student recruitment. International students often feel overwhelmed by complicated and lengthy processes conducted in a non-native language. Institutions that are able to streamline and clarify application processes have seen strong enrollment gains.

As an example, Wichita State emphasizes efficiency and speed above all else in international student applications. Admission staff respond to all inquiries within 24 hours and communicate admission decisions within 48 hours. They also immediately send I-20 forms to admitted students by express mail. This rapid process offers students early positive reinforcement and communicates institutional investment.

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Imperative #2: Bundle Episodic Services into Memberships and Turnkey Packages