In today’s higher education landscape, university CFOs are under immense pressure. They’re expected to drive operational efficiency, maintain regulatory compliance, and deliver financial resilience, all while navigating shifting IRS regulations, student expectations, and budget constraints. Amid these challenges, one specific area often overlooked as a strategic lever is 1098-T compliance.
Most institutions treat 1098-T as a basic reporting requirement. But forward-thinking universities. Especially those among the top 1% have started using it as a catalyst for broader financial transformation. When approached strategically, 1098-T compliance doesn’t just check a box; it protects institutional credibility, optimizes workflows, and reduces financial risk. Here’s why this form matters more than you think, and how getting it right can significantly improve your university’s financial health.
Understanding the 1098-T: More Than Just a Tax Form
IRS for 1098-T is used by eligible educational institutions to report tuition payments and related educational expenses for enrolled students. Students and also their families can use it to claim education-related tax credits such as the Lifetime Learning Credit (LLC) or the American Opportunity Tax Credit (AOTC).
What Makes 1098-T Compliance Complex?
While the form itself is short, gathering and validating the data behind it is not. Universities must reconcile data across multiple departments, including billing, registrar, and financial aid, to ensure accuracy. So, errors or omissions can trigger penalties, audits, and even reputational harm.
The IRS has become more aggressive in issuing fines for late, incorrect, or unmatched 1098-T forms. Inaccurate data submissions can also lead to student frustration and legal disputes, creating unnecessary tension and expense for institutions.
The Cost of Non-Compliance: It’s Not Just About Penalties
Non-compliance with 1098-T regulations can result in:
- Fines up to $310 per form for incorrect or late submissions (as of the 2025 IRS penalty structure).
- Delays in student refunds or education tax benefits can lead to reputational damage.
- Increased audit risk from the IRS and also the Department of Education.
- Operational inefficiencies due to repeated corrections and manual reconciliation.
When these costs compound over time, they place an unsustainable burden on finance teams and institutional budgets.
How Top Universities Are Turning Compliance into a Financial Advantage
However, the highest-performing universities don’t just meet 1098-T requirements, they use them to modernize operations, reduce costs, and strengthen trust with students and regulators. Here’s how they’re doing it:
1. Automating the Entire 1098-T Lifecycle
Top universities are ditching manual spreadsheets and paper-based processes for cloud-based fintech platforms. So, Platforms that offer full automation of 1098-T workflows, from data extraction to validation, filing, and audit readiness.
Why It Matters:
Automated processes reduce the chance of human error, create real-time audit trails, and ensure filings are submitted correctly the first time. This translates directly into reduced penalty risk and lower processing costs.
A mid-sized university in Pennsylvania adopted a compliance automation tool in 2024. They reduced form errors by 70% and eliminated late filings, saving nearly $85,000 in penalty exposure.
2. Integrating Campus Systems for a Single Source of Truth
Most compliance failures occur due to data discrepancies between systems like Student Information Systems (SIS), Enterprise Resource Planning (ERP), and Financial Aid platforms. The best-performing institutions eliminate these silos through system integration.
When data flows seamlessly across departments, reconciliation becomes faster, more accurate, and less labor-intensive. It also improves transparency and creates cleaner documentation for audits. A West Coast university integrated its SIS and ERP systems using a fintech-backed middleware. As a result, it reduced reconciliation time by 40% and avoided the need for temporary filing season staff.
3. Proactively Preparing for Audits
Audit readiness isn’t a luxury; it’s essential. Universities leading the charge use analytics dashboards that monitor discrepancies and allow finance teams to intervene before an error reaches the IRS.
Being audit-ready means fewer surprises, faster IRS responses, and more confidence during review periods. It also positions the finance department as proactive rather than reactive. According to a 2025 review from Tax1099, institutions using real-time validation and audit dashboards saved an average of 120+ hours per audit compared to those using manual systems.
4. Reducing the Compliance Workload While Improving Accuracy
Manual entry and reconciliation take up valuable time that could be spent on higher-priority initiatives. Certainly, Universities that streamline 1098-T processes are freeing up finance staff to work on long-term financial planning and student service innovation. An East Coast university used automation to reduce staff hours on 1098-T prep by 50%. This allowed them to redirect those hours toward building a predictive financial aid model for first-generation students.
5. Creating a Better Student Experience
Students today expect their financial information to be as easy to access as their class schedule. Errors in 1098-T forms delay tax credits, refunds, and can trigger complaints to the financial aid office or higher administration. When forms are accurate and filed on time, it enhances the student experience, especially for those counting on tax benefits for tuition planning.
Why 1098-T Compliance Is Now a Strategic Priority
In 2025, compliance is no longer just about avoiding penalties. It’s about reducing friction, saving money, and boosting the effectiveness of finance teams. Universities that continue treating 1098-T as a one-off task are falling behind. Meanwhile, those investing in smarter processes are gaining a long-term advantage.
With student financial complexity increasing and IRS enforcement tightening, automation and integration are no longer optional; they’re critical. The universities that act now will be better prepared for future filing seasons, better protected against audits, and better positioned to serve students.
The Bottom Line for CFOs
University CFOs face a dual mandate: ensure compliance and drive transformation. 1098-T compliance sits right at the intersection of these two responsibilities. Managed poorly, it becomes a seasonal crisis. Managed strategically, it becomes a year-round opportunity to strengthen data systems, boost operational performance, and protect the bottom line.
The real cost of 1098-T is not the IRS fine, it’s the opportunity cost of not optimizing the process. Fintech offers the tools, but leadership must make the choice to use them. If your university is still using manual processes or legacy systems for 1098-T, it’s time to consider a better path forward.
Join our exclusive webinar featuring Jeffery Cronin, Chief Strategy Officer at Zenwork, as he explores how the top 1% of institutions are using fintech to build audit-proof, student-friendly, and cost-effective 1098-T workflows. Whether you’re preparing for 2025 or laying the groundwork for 2026, this session will show you where to focus and where to start.
Reserve your spot today and take the next step toward making 1098-T compliance a financial advantage, not a liability.
FAQs
1. What’s the financial impact of switching from manual to automated 1098-T workflows?
Universities that automate 1098-T processes often see up to 70% fewer filing errors, reduced audit risk, and significant cost savings from fewer penalties and lower seasonal staffing needs. Mid-sized institutions have saved tens of thousands of dollars annually just by avoiding late and inaccurate submissions.
2. How can I assess whether our current 1098-T process is putting us at risk?
Start by evaluating error rates, reconciliation times, and the volume of post-filing corrections. If your finance team is manually gathering data from separate systems, struggling to meet deadlines, or facing repeated student complaints, those are strong indicators that your process is vulnerable and expensive.
3. What systems need to be integrated for a streamlined 1098-T strategy?
At a minimum, integration should include your Student Information System (SIS), ERP/finance software, and financial aid platform. Seamless data flow between these ensures clean records, faster reconciliation, and accurate filing, all of which reduce your exposure during audits.
4. Is improving 1098-T compliance a student-facing issue?
Yes. Delays or mistakes with 1098-T forms can hold up student tax refunds and credits, leading to trust issues with the institution. Providing timely, accurate forms enhances the student experience and reduces strain on financial aid and bursar offices during tax season.
5. What should I look for in a fintech partner for 1098-T compliance?
Look for solutions that offer end-to-end automation, real-time error checks, integration capabilities, and audit-ready reporting. Bonus points if the platform includes dashboards, compliance tracking, and scalability for future IRS or DOE changes.
