What Are Tuition Payment Plans?

Tuition payment plans allows students to split their total tuition payment into equal monthly installments. This makes it easier for families to manage college expenses without breaking the bank. Some colleges may call it a tuition installment plan or deferred payment plan.

This is different from a standard plan where the full tuition is spread equally over the semesters. Students then pay the tuition in one lump sum at the beginning of each semester.

Various coins coming out of a black piggy bank.

How Tuition Payment Plans Work

Tuition installment plans are designed to help families budget for college without taking on excessive student loans. It is particularly helpful for families that can afford to cover the tuition, just not all at one time.

For example, let’s say the total tuition for one year is $20,000. You may find it difficult to pay this full amount at one time at the start of the school year. Even having to pay $10,000 at the start of each semester can be difficult. If you cannot raise that amount, the only alternative is for you to take a student loan.

With a tuition installment plan, the $20,000 will be spread over several months. Most colleges spread the cost over 10 months. In this case, you have to pay $2,000 every month by a set date. It’s still a significant amount but it’s a lot more manageable than paying the full $20,000 at one time.

Every college designs their tuition payment plans differently in terms of the installments as well as what the plan covers. Most plans cover only the direct expenses paid to the school. Tuition and fees are standard inclusions. Some colleges may also include the cost of campus housing and meal plans in the payment plan. Other expenses such as books, transportation, and supplies are usually not included.

Is a Tuition Payment Plan a Good Option For Me?

This is a good option if you can’t pay the full tuition upfront but can pay the installments every month by the due date. Using a payment plan is far less expensive than taking a student loan to cover your shortfall. This is because most colleges don’t charge interest on this plans. Student loans on the other hand come with high interest rates. Interest starts accruing from the day you receive the funds until such time that the loan is paid off.

You save even more because you pay minimal fees when you sign up for tuition payment plans. When you take a student loan, you pay relatively higher origination fees.

Another advantage of installment plans is that they don’t require a credit check. This can be a relief as you may not had had the chance to build good credit yet. It can be harder to get approved for a private student loan with a low solid credit score. Even if you do get approved, you’ll almost certainly pay a higher interest rate.

This may not be a good option for you if you cannot afford to pay the installments when they are due. The consequences for missed or delayed payments vary from one college to another. In most cases, you will have to pay a penalty for the first missed payment. The college may also place a hold on your account, which will prevent you from registering for classes or even graduating. If you miss multiple payments the college reserves the right to terminate your payment plan. Once this happens, the remaining balance becomes due immediately.

Generally, it’s advisable to sign up for a tuition payment plan and pay what you can. Then take out loans to cover your shortfall. This still helps you save money rather than taking student loans to pay the full tuition upfront.

Do All Colleges Offer Tuition Payment Plans?

Most colleges do, but not all. Among those that do, some set up and manage their own plan in-house while others use the services of private providers. Every college offers only one version of a tuition payment plan. You cannot choose or design your own installment plan. You have to agree to the terms that the college offers.

If your preferred school doesn’t offer a payment plan, don’t give up. There are a few private organizations that offer independent tuition payment plans. Your school’s financial aid office will be able to refer you to a trusted organization.

Colleges with higher tuition fees are more likely to offer tuition installment plans. This is to put their costs within reach of more students in order to build a more diverse student body.

Important Things To Know About Tuition Payment Plans

Payment plans only cover the cost of tuition and fees. However, there are other costs you will incur while in college. You still have to pay for books, accommodation, food, supplies and personal expenses. It’s important to make sure that you can afford the installments as well as other essential costs. If you can cover the installments but not the other expenses, you may still need to take a small student loan.

Before approving your application, the school or service provider will want to know how you plan to make the payments. Most will accept payments from your savings or checking account at a bank or payments by credit or debit card. You must be able to pay via either of these modes to get approved.

You can get more information and sign up for a tuition payment plan through the college financial aid or cashier’s office or through the college’s bursar.

 

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