bursar-l: Finance Charges versus Late Payment Fee

I've always liked the way we charge finance charges since they are based
on the actual past due balance. We do 1% per month, calculated only
when we run a bill based on number of days since the last bill.

The amounts tend to be smaller than the flat penalties I've seen
elsewhere, so there are less arguments.

Why don't other schools use charges instead of the flat penalty for
dealing with late payers?

But here's something new that I'm wondering about. As we try to counter
bankruptcies and finally add wording to each application and
registration point that "any unpaid balances will be considered credit
granted with the student assuming an educational debt", would we
technically need to send everybody a 1099-INT form if we charged them
finance charges, perhaps now viewed as interest?

Or even without wording about granting credit in the form of a loan,
could someone argue that we should be sending 1099-INT forms anyhow?

Thanks for any input,
Stuart Warner
Western New England College
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Received on Thu Feb 1 12:43:08 2007