While the concept may seem unnecessary, a formal document—signed by each student—that states tuition payments are, in fact, expected is now required by a majority of colleges.

In December 2016, Idaho State University began folding a financial responsibility agreement into the course registration process. Student financial obligations have not changed.

Rather, the move is an attempt to ensure students are aware of details, such as education costs and enrollment-related financial policies, surrounding what they owe, says Brian Hickenlooper, interim chief financial officer and bursar.

When developed and executed with best practices in mind, the documents protect institutions legally and financially. Following are three questions to answer to ensure your own agreement is most effective.

Why require a signature?

These documents are important in helping with collections—if it comes to that, says Ken Wolterman, bursar at the University of Cincinnati, which has required students to sign an agreement, electronically, for more than 15 years. However, the Ohio attorney general decided the contract may not hold up if a student declares bankruptcy, even when the debt is from Title IV aid refunds.

In those cases, the university has to write off the debt.

Although Cincinnati, like most institutions, spent time and legal resources carefully crafting the agreement, students often approach the task of signing as they do many legal documents.

“I seriously doubt the agreement is read by any student; it’s more about protecting the university and preparing to collect the debt due,” Wolterman says. “These agreements are referred to only when a debt is challenged or in court.”

Recent court rulings prove the necessity of crafting strong agreements.

For instance, in 2014, Bradley vs. Franklin Collection Service held that a contract needs to contain specific language for charging collection fees. In that case, simply stating a party agrees to pay “all costs of collection” and then charging a percentage fee was found to be in violation of the Fair Debt Collection Practices Act, says Bryan Dickson, senior policy analyst at NACUBO.

“Schools need clear records of debts and associated collection fee practices, especially if they intend to assign debts to collectors,” he adds.

Legalities aren’t the only motivation for these agreements. Idaho State deploys them to clearly inform students about expectations for payment and institutional policies regarding e-billing, late fees and contact methods.

At the University of Denver, which began requiring signed agreements in fall 2015, the goals focus heavily on communication, says Janet Burkhardt, director of student financial services. Via the document, students learn of:

• their rights regarding student accounts (such as how the university will adhere to state and federal consumer protection laws), along with information about billing disputes and refund calculations and practices
• their obligations, including deadlines for payments, as well as details about how the bursar’s office will communicate with them

Also, students agree to receive 1098-T tax forms and other official notifications electronically, and to accept communication via landline, cell phone or other wireless devices.

What are best practices for wording the document?

A NACUBO committee’s 2015 advisory report offers model language to include in student financial responsibility agreements. While there are many key components to include, “the provisions that make sure institutions are in compliance with various federal laws and regulations are crucial,” Dickson says.

Suggested language covers four topics: a promise to pay; delinquent accounts and collections; communications; and language explaining that the current agreement overrides previous agreements.

“Campuses may have other priorities, however,” Dickson says, adding that it’s important to check with counsel to ensure compliance with any state laws and regulations.

For the University of Cincinnati, the main focus is “the student agreeing that they are personally responsible for the debt associated with tuition, fees and miscellaneous charges posted to their account,” Wolterman says. “Our relationship is with them, not their parents.”

Still, he adds, the university maintains several channels of parent communication—including a parent portal and a process that allows for interaction with a parent (or friend).

At the University of Denver, “the blanket waiver for electronic communications is critical,” Burkhardt says. “It reinforces what the university considers to be the official communication channel for all information.” The waiver also gives the institution permission to send electronic tax forms—improving efficiency and reducing costs.

What comes next?

Simply covering all the legal bases isn’t all that’s required. Implementing electronic agreements can involve modifying student information systems, creating and maintaining collector tables, and giving staff additional processing tasks. Any agreements at colleges where students don’t self-register require hard copies. Also, not everyone signs immediately.

“We’ve had students ask to modify the agreement prior to signing or call to discuss particular parts of the agreement,” Burkhardt says. In most cases, those requests come from parents seeking language about notification regarding financial aid adjustments and billing adjustments, Burkhardt says.

Because the department already sends students new billing statements whenever aid or tuition and fees are adjusted, Burkhardt has never accepted a modified agreement.

“My standard response is that the agreement was crafted by university counsel and cannot be changed at will,” she says. “But I do alert counsel about new trends within the industry and new regulations.”

Those updates could result in the attorney making modifications.

After agreements are signed, students can always refer back to them when they have questions about their responsibilities or the institution’s financial processes.

At the University of Denver, students can view signed contracts via the student portal—which staff remind them of when students refute a charge, have questions about late fees or ask why tax forms have been emailed, Burkhardt says.  And if a student is sent to collections the signed form is sent to that outside agency.

At the end of the day, the financial responsibility agreement is good for the institution and worth having so everyone is on the same page. But administrators can keep in mind that it’s just another form in the lives of students—students used to being presented with terms and conditions all the time, whether it’s to access an app or for a Netflix subscription.