Roommates changing out in large house and security deposits

[John K.]

Let's say you have a house with 4 tenants in a college area, and every year one or two people leave, and their friends become the new tenants (after applying, screening, etc, etc, etc).  How do you handle security deposits for each new lease with rotating people in and out?  

In Wisconsin we send the security deposit with "AND" between each tenants name, so it's made out to all of them together - since many times college students don't have the money to pay a new full security deposit while waiting for the old one to be returned when changing roommates, how do you "apply" their new security deposit to their new lease term and refund the amount due to old tenants leaving?  I have to imagine there are some good creative ways others do this that's within the legal limits of the law.