Alternative tuition plans are designed to help students pay their college fees without taking out expensive student loans. There are three main types of alternative tuition plans – Prepaid Tuition Plan, Tuition Guarantee Plan, and Tuition Payment Plan.
All three work differently and have different terms and conditions. The most notable benefit of alternative tuition plans is that they work out cheaper than taking out student loans. Understanding how each one works will give you an idea of the options available when it comes to paying for college.
Prepaid Tuition Plan
With a prepaid tuition plan, your tuition rate remains the same for every year that you attend college. The plan only applies to the cost of tuition. It doesn’t apply to other expenses such as room and board or fees related to student activities.
The biggest benefit of a prepaid tuition plan is that it allows you to lock in the first year tuition fee until you graduate. College tuition typically increases every year. By locking in the first-year tuition fee, the yearly fee hike won’t affect you. You will continue paying the lower rate for every year that you attend college. This can save you a substantial amount of money.
The downside of this plan is that it requires you to pay the full cost of tuition upfront. If you are enrolled in a 4-year degree program, you will have to pay the tuition fees for all 4 years before you start school.
A prepaid tuition plan is an excellent option for you if you have enough cash to pay the full tuition cost upfront. It will save you money in the long term. If you don’t have funds available to make an upfront payment, you could consider enrolling in a tuition guarantee plan.
Tuition Guarantee Plan
A tuition guarantee plan is similar to a prepaid tuition plan. With this plan, you also lock-in the first-year tuition fee for the duration of your enrollment. The big difference between the two is that you don’t have to pay the entire tuition fees upfront with a tuition guarantee plan. You pay the fees per semester just as you normally would.
This plan simply guarantees that your cost of tuition will remain the same for every year that you attend college. This means you pay the same amount every semester until you graduate from the program. This only applies to the cost of tuition. Other costs such as room, board, and student activities are not included.
Tuition guarantee plans are a great option. Paying installments is so much easier than paying the entire fees upfront. However, there are certain requirements you are required to meet in order to be eligible for this plan. For one thing, you must be enrolled as a full-time student in a degree program. Part-time students and students enrolled in associate programs may not qualify for this tuition plan. Other eligibility requirements may vary from one college to another.
Tuition Payment Plan
Tuition payment plans allow you to split the total college tuition into equal monthly installments. They are also known as tuition installment plans. With this plan, you pay the tuition fees for the year in equal monthly installments through the year.
There are several benefits to tuition payment plans. You do not pay any interest on the monthly installments. The smaller installments make it easier for many families to pay out of pocket.
Most schools charge a low finance charge of about $100 – $200 for processing the loan. They still work out cheaper than student loans, though, because you are not paying any interest on the installments.
You will have to meet certain requirements to be eligible for a tuition payment plan. These criteria may differ from one school to another.
Where to Find Information on Alternative Tuition Plans
Finding information on alternative tuition plans can be tricky. You can always contact the school’s financial aid office directly and ask about options. Another way is to look up the school on College Navigator and see which plans are offered under “Alternative Tuition Plans” in the “Tuition, Fees, And Estimated Student Expenses” section.
Keep In Mind…
Not all colleges will offer alternative tuition plans. Even if they do, it may only be one of these options. It’s vital to do your own research when it comes to building your college payment plans. However, it’s comforting to many to know that there are various forms of aid out there to help pay for college.