Integral to the business of education is management of the myriad financial commitments of students, faculty, and staff; a task for which universities commonly seek outside help.

However, unlike many of its peer institutions that rely on outside banking services, Princeton has chosen to handle the lion's share of its loan administration and accounts receivable activities. Its new system -- Java- and Unix-based applications that will retire aging mainframe applications -- will not only give the university more flexibility and independence in managing its assets and liabilities, but it also will significantly cut costs.

Princeton handles the administration of a wide range of loan programs, including student loans and student accounts, faculty and staff mortgages, and parental loan programs. The university's combined loan programs, totalling about 28,000 active accounts, generate roughly $400 million in receivables annually.

To continue to service its extensive loan portfolio internally, and to broaden the reach of its loan administration and accounts receivable systems to other university departments, partner organizations, and customers, Princeton opted to replace its assortment of mainframe-based applications.

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"We had a large number of systems that we were using to administer this portfolio of loan programs," said Ray Clark, treasurer at Princeton. "They were homegrown -- some written 10, 15 years ago, or more. They were all mainframe programs, were not well documented, and were fraught with year-2000 problems. They were not in a sustainable situation."

The university decided about three years ago to replace this assortment of loan administration systems with a coherent, centralized system, according to Clark.

The university is installing a Java-based client/server application that includes an Oracle database running on a Unix server and Windows NT workstations.

Princeton earlier this year retained international consulting company and developer SPL WorldGroup to help codify the business and functions of the loan systems.

After defining the key points necessary to carry out the loan systems' basic functions, Princeton evaluated packaged enterprise resource planning (ERP) and banking applications. The university opted for a custom system, having determined that packaged applications lacked the flexibility to handle such a complex consolidated loan program.

"We were performing functions that apparently at many other institutions were distributed," Clark explained. "Therefore, we were unable to find one [package] that would be able to meet all of our needs. We reached a conclusion that if we wanted to continue to take advantage of the efficiencies of consolidation of the administration of these programs, we would have to program our own application."

Although the treasurer's office systems are tightly integrated with the financial aid office's systems, one goal of the new system is to allow other departments at the university to initiate and complete transactions, according to Jack Yuncza, associate treasurer.

By maintaining its loan programs internally, rather than relying on outside financial institutions, Princeton is able to keep administration costs lower, Yuncza said.

"[The cost is] about 2.5 percent lower than [it would be relying on] outside banks," Yuncza said. "We're running our operations at about 60 percent of the cost of comparable operations."

Maria Bizarri, project leader, who is also manager of student accounts, cited Java's object-oriented design model and flexible user interface among the reasons for tapping the technology for the new loan system. The resulting applications are "user maintainable, with soft-coded tables. Users can support and maintain changes in accounts, without programmer intervention," she explained.

Although Princeton's own computer science department has grabbed headlines for its work in piercing the security of Java and online technologies in general, the new loan administration system is expected to at least match the security of its precursory systems and to improve with time, Bizarri said.

Princeton's student accounts system will be delivered by late October, with the student loan application expected by year's end.

The university will then push some of the account management tasks out to its customers, using automated phone and Web access to the system to provide account balance information, payment due dates, and the ability to update address information.