You don't need to bribe members to pay dues. That's self-defeating. I don't know any group which allows members to become 'inactive' while still attending officially sanctioned events. If that's happening and those members are still enrolled in the school, then if I were in your shoes, I'd stop that immediately.
As far as tradition goes, that's a horseshit reason for anything. I'm the chapter advisor for my chapter and I have a board of advisors which I'm kinda-sorta in charge of. One thing they all know NEVER to say is that an acceptable justification for doing something a certain way (or at all) is "because that's what we used to do." Times change, people change, technology changes, everything changes. So too must we adapt.
If since 1986, your group hasn't had a problem like this, then to me, that sounds like a helluva good justification for change. The status quo isn't manageable. You're in a position to fix it. Worst that can happen is doing nothing. If you try and fail, at least you tried.
-- and really... to hell with what alumni think (unless they're giving money, if they want their opinion to count, they'd better serve the organization with their time or treasure).
And what MC said, everything in writing. Make sure to set up strong enforcement mechanisms which are commanded by deadlines and actions officers are commanded to take and given little discretion over. E.g., 30 days late = social suspension/60 days = loss of any office, total suspension/90 days = termination of membership, automatic. Maybe allow those who are behind to take a semester off (1 total for the entire term of their active membership) to get caught up, follow up on payment plans, etc.
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SN -SINCE 1869-
"EXCELLING WITH HONOR"
S N E T T
Mu Tau 5, Central Oklahoma
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