Tamara
We came accross the same problem when we first converted to 7 two years ago. We had faculty-staff in as studens and then if they were also parents a separate parent record. When we converted, we made all the student facutlty-staff records inactive as far as billing status and gave an enrollment status so as not to come up in a query. We mereged the parent record and faculty-staff record for those with children in the school.
We now bill on the facutlty-staff record (which shows up in Student billing as an individual) for their personal charges. This seemed the easiest and most cost effective solution. It would be nice if the records could be merged just to clean up the database. I also noticed that the admissons office puts siblings in as individuals since they are not applicants. If they apply later, then a students record is created. That again leaves duplicate records in the database of 2 different types.
We use 'student' records types for billing staff and faculty. We set their status to "Staff" so they do not show up in any queries. I haven't tried it yet, but since we print statements payer-centric, I plan on setting the 'student' record relationship to have the 'staff' record as their parent.