After a student applies for financial aid, they receive a letter in the mail regarding their different options for disbursement of Pell grants and student loans. This letter explains three options: a paper check, an Automated Clearing House (ACH) deposit into a preferred bank account or the Webster University credit/debit card. However, the letter isn’t sent from Webster — it is mailed from Higher One.
Higher One is a third party company employed by Webster as a financial aid and student loan disbursement mechanism. According to Greg Gunderson, vice president and chief financial officer, Higher One was the first company to provide this service for Webster. The university has used the company for at least three years, but is now considering hiring a new vendor.
The contract between Higher One and Webster expires this year, and the finance department will begin their request for proposal (RFP) to search for a new provider. The RFP is an invitation sent to different vendors for them to begin the bidding process. This process includes sending proposal of services. The RFP ends in 12 months, so companies could begin the bidding process soon. Gunderson said that although Webster is pleased with the services of Higher One, they want a vendor less concerned with ACH and debit/credit card accounts. Instead, Gunderson and the finance department are more interested in a financial institution and not just a disbursement service.
“I like the fact that banks bring a broader perspective,” Gunderson said.
Gunderson said he’s not sure if a new provider will increase the speed at which funds are available to students, but that banks are able to provide all three disbursement options Higher One currently offers.
If the university decides to employ a financial institution to handle financial aid and loan disbursement, students will not be significantly affected. According to Gunderson, the university is interested in doing a full conversion with a new vendor. This means that both current and new students will be converted to new accounts with a new vendor. If this happens, a letter will be sent to current students asking if they would like to continue with their current preference (ACH, check or card).
Once that is done, the new vendor and finance department will take that preference and switch it to the student’s new account. Students with a Webster debit card will be sent a new Visa or Mastercard, depending on which the new vendor provides. The new debit card will look like a student ID card with a photo on one side and an account number on the other. Students will have the option of turning the debit/credit card on or off.
Gunderson said students shouldn’t have any issues with the process of switching to a new vendor.
“Whatever we do, we want for students to ultimately think we have made the better decision, if not the best decision,” Gunderson said.
The finance department is interested in providing students with a customer service experience that Higher One couldn’t offer. Banks are interested in this decision because they want to form a relationship with students in hopes of making them lifetime customers.
The university paid Higher One for completing students’ paperwork and sending out checks. Under the original contract, Webster receives a rebate based on students’ volume of usage, but Gunderson said the rebate doesn’t come close to the amount the institution pays. Last year the university received under $14,000 from Higher One. No special payments are made to Higher One based upon the student’s usage.
After a student has been awarded financial aid, Higher One contacts the student via email then mails them a letter with details of the three refund preferences. Due to the university objective, as well as Higher One, funds are disbursed faster than the federal law requires. Students can have funds available to them within 5-7 business days by paper check or within 2-3 business days if they decide to have an ACH transfer to another bank account.
To have refunds available on the same day Webster releases them, students can register for the Easy Refund, which puts the money on their Webster debit card. Student loans may take longer for the student to receive because they are third party loans from banks, not the federal government. Paper checks take longer to process because they must have signatures from both the university and the student. The funds are then deposited into the school’s bank account and, after they are cleared, deposited in the student’s Higher One account.
Students are not contacted by financial advisors with any information on the disbursement options. Amanda Swearingen, freshman acting major, decided to use the Webster debit card because she didn’t have any other credit or debit cards. Although she hasn’t spoken with a financial advisor, she said she felt the fees were carefully explained in the pamphlet the card was sent with.
Clare Bowen, freshman sociology and women’s studies major, received her card but isn’t sure if it’s active. Bowen said she hasn’t done anything with her refund and hasn’t spoken with any financial advisors about her disbursement process or options.
Although Webster financial advisors may not be active in explaining disbursement options, the new vendor will offer many different outlets and customer services. Most banks are interested in opening a branch on campus or sending representatives to the university so students can speak with a person face-to-face to inquire about their account. Some banks also have mobile apps available on Android and iPhones for students to access their account information on the go.
A new vendor could also allow students to transfer funds to and from any other account, whereas Higher One only allows this transaction to be made with other Higher One accounts.
Gunderson is unsure when the university will switch to a new vendor. He said if the RFP is sent now, it could possibly take a year.
The estimated time frame includes sufficient time to choose the best vendor and train all representatives.
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