Payment of Undergraduate Fees
Adrian Kirkwood

Context:
This article describes the results of a survey on procedures for collecting student fees at the Open University (UK).

Source:
Kirkwood, Adrian. 1987. "Payment of Undergraduate Fees by Direct Debit—A Student Survey, 1987." Institute of Educational Technology SRC Report 19. Open University, Milton Keynes, pp. 1-6.

Copyright:
Reproduced with permission.

1. INTRODUCTION

1. Background
   

   This survey was commissioned to provide information for the Fees Re-Development Steering Group in its deliberations about restructuring the university's fee collection procedures. Students' reactions were sought to the proposal that installment payment of undergraduate fees should be made by Direct Debit.

   The survey was intended to provide information about:

   • the proportion of students with access to a financial facility that would enable payment to be made by direct debit;
     
     
   • students' experience of the direct debit system for the payment of household bills;
     
     
   • students' willingness to pay OU fees by direct debit;
     
     
   • why students would prefer not to use the direct debit facility for the payment of OU fees.
     
2. The Survey
   

   The questionnaire, designed to elicit the information required from current undergraduate students, was accompanied by an Information Sheet which explained how the Direct Debit system operates. Students were asked to read the explanatory sheet before completing the questionnaire form. A copy of both the survey questionnaire and the information sheet can be found in Appendix 1.

   A nationwide sample of 1,500 post-foundation undergraduate students was sent the survey questionnaire in July/August 1987. When the responses were analyzed for this report at the beginning of October, completed survey forms had been returned by 1,272 students—a response rate of 84.8%.

2. FINANCIAL FACILITIES USED BY STUDENTS

1. In order to pay their OU fees by direct debit, students must operate a current account with a commercial bank or other financial institution offering direct debit facilities. Thus the first question asked students to indicate which financial facilities were available to them.

   Well over 90% of respondents have an account with a commercial bank, nearly two-thirds have a credit card and over a quarter have a Building Society account with direct debit facilities.

   The 'other' facilities mentioned by students were mainly budget or interest bearing accounts which did not enable direct debit payments to be made.

2. Before asking students whether or not they would be prepared to pay their OU fees by direct debit, we wanted to obtain some indication of their familiarity with this system of payment. Accordingly, a question sought information from students on their use of the direct debit system for the payment of household bills.

   Over half the respondents report paying more than one household bill by direct debit and, in total, just over two-thirds of students had experience of paying by direct debit for this purpose. Nearly one-third of students pay none of their household bills by this method.

3. PAYMENT OF OPEN UNIVERSITY FEES

1. In order to ascertain the method of fees payment currently favored by students, we asked about the method by which 1987 fees were paid.

   A little over a third of respondents had paid their 1987 fees in a single lump sum, with over 60% paying by installments (either by standing order or bank giro credit).

   Of the students who indicated that their fees were paid by a method other than those listed, two-fifths (41%) had their fees paid by an employer/ LEA/ sponsor, over a quarter (28%) had their fees met at least in part by the OU/FAF, and nearly a fifth (19%) paid by instalments using cash/cheque or direct debit.

2. When asked whether or not they would pay their fees by direct debit if the university offered the facility, nearly two-thirds of students indicated that they would do so.

   Those who reported that they would not use the facility (34.4%) were asked to state why in answer to Question 5.

3. We wished to know why students were unwilling or unable to make use of the direct debit facility.

   Well over half would prefer to pay their fees in one lump sum-this represents 19.7% of total respondents. So, in total, 84.3% of students were either willing to pay by direct debit or preferred to pay in one lump sum.

   Only a very small proportion (1.9% of total respondents) report that they do not have access to a bank or building society account that would enable payment to be made by direct debit.

   About two-fifths of those not wishing to pay their OU fees by direct debit (3.1% of total respondents) have some other reason for making this response. Students were invited to specify why the method of payment was not appealing. Analysis of the written responses reveals the following main categories:

   1. Fees paid by a third party. A quarter of these responses refer to fees being paid (in full or in part) by an employer/ LEA /other sponsor or through financial assistance from the OU. Many students claim that use of the direct debit system would delay the reimbursement of fees,
      
      

      "I need to present the payment counterfoil (as proof) for reimbursement of 80% by my employer".

   2. Mistrust of direct debit system and transfer of control. Nearly a half of students' written comments refer to a mistrust of the direct debit system (often with a previous bad experience), a stated preference to remain in control of personal finances or an unqualified preference to pay by standing order. For example:
      
      

      "Control would appear to pass to the 'Payee' rather than the 'Payer"'.

      "I have a personal objection to payment by direct debit system where unspecified amounts are required".

      "Have found direct debits to be totally unreliable".

   3. Inconvenience of direct debit system. Some students considered the system inconvenient for a number of reasons. Five per cent stated that they wished to maintain flexibility, 2% reported paying their fees from a savings/budget account, while 4% were not in employment or had very limited funds:
      
      

      "Difficulty of ensuring that bank account balance does not fall below the minimum for charge free operation".

   4. Completion of OU studies. A small group of responses (2%) indicated that the individuals would not be continuing their studies after this year.
   
   

4. A final question gave students the opportunity to make any further comments on the proposals to use direct debit. A large number of the respondents made a response and the majority of them were favourable. Many students welcomed such a system if it would reduce administrative costs for the University.

   Some took the opportunity to reiterate their desire to pay in one lump sum. Some students' comments referred to details of the operation of such a system, while broadly indicating support for the facility. Quite a few students restated their mistrust for the system and their preference to retain control of their finances, summed up by one student in the phrase:
   
   

   "On your bike!".

   [A copy of all the responses made to this question has been lodged with the Undergraduate Fees Officer].

Acknowledgments

I must thank Dr. Clive Lawless, Head of the Student Research Centre, and Christine Wareham and Rita Jolley of the Survey Processing Office for their assistance with this survey.