Tuition installment plans provide an alternative for families who can afford to pay for a child’s college education, but not in one big lump sum at the beginning of a semester or quarter. Tuition installment plans, also called tuition payment plans or deferred payment plans, split college costs into equal monthly payments. This makes budgeting for college costs more manageable.
How Do Tuition Installment Plans Work?
Tuition installment plans are designed to help you manage college expenses without breaking the bank.
Instead of paying your student’s college bill for a semester or quarter all at once, you pay in monthly installments. In many cases, the first payment is larger than the ensuing payments.
Your bill must be paid in its entirety by the end of that academic period.
Most plans do not charge interest if you pay by check or direct deposit.
What Costs Are Covered by Tuition Installment Plans?
Most tuition installment plans cover only the direct costs billed by and paid to the college. These include tuition and fees and in some cases, campus housing and meal plans. Other costs, such as books, supplies, equipment and transportation to and from school are not covered.
Advantages of Tuition Installment Plans
Tuition installment plans are a good alternative to long-term student loan debt.
- Tuition installment plans are less expensive than student loans. They have a modest up-front enrollment fee of approximately $100-$150 and do not charge interest.
- Installments are typically spread over the period of a year or slightly less.
- Tuition installment plans offer convenient automatic withdrawal from the payer’s bank account or credit card.
- Tuition installment plans generally do not require a credit check.
Disadvantages of Tuition Installment Plans
There are a few disadvantages to tuition installment plans.
- Service fees for tuition installment plans can add as much as three percent to your bill.
- Some colleges charge an additional fee if you pay by credit card or pay late. To determine your college’s policy, check with its bursar’s office.
- The fees for a tuition installment plan are not eligible for the student loan interest deduction.
Who Offers Tuition Installment Plans?
Though some colleges and universities have set up their own tuition installment plans, most use the services of outside providers. Some of the most commonly used are:
Nelnet Campus Commerce (formerly Tuition Management Systems)
Students and their families generally do not have a choice of tuition installment plans. Most colleges use the services of only one provider and that provider offers only one version of a tuition installment plan.
Higher-cost colleges are especially prone to offer tuition installment payment plans. Why? Possibly because most colleges strive for diverse student bodies, and they stand a greater chance of achieving that if they make their costs within the reach of students whose families have more limited cash flow. So if your student has not yet chosen a college, you may want to consider whether the college’s tuition installment plan makes the college costs more affordable.
Requirements for Enrolling in a Tuition Installment Plan
When you enroll in a tuition installment plan, the plan will want to know how you intend to make the payments. Most will accept either a credit/debit card or a savings or checking account at a bank, but you have to have at least one of these.
How Do Students and Parents Sign Up for a Tuition Payment Plan?
Typically, parents and/or students can sign up for tuition payment plans through the college’s bursar, the cashier’s office or the college financial aid office.
Can Your Student Make the Payments on the Tuition Installment Plan?
Most tuition installment plans will not allow a dependent student to sign up for a tuition installment plan entirely on their own.
If you want to make your student responsible for making the payments, there are ways to do it. If your student has a student bank account, you can set up an automatic transfer from that account to the tuition installment plan. Just be sure the student has enough funds in the account to cover the monthly installments.
When Should You Apply for a Tuition Installment Plan?
Don’t wait until the last minute to apply for a tuition installment plan.
Discuss tuition installment plans with the college before school begins. Not all colleges offer tuition installment plans, so if this is a really important issue for you, check to see if your chosen college offers a tuition installment plan before your student enrolls. Use Collegedata.com to find out if the college of your choice offers a tuition installment payment plan. Choose the “Financials” tab on the College Profile.
If you enroll your student at a college that does not offer a tuition installment plan, the college’s financial aid office may be able to refer you to a private commercial tuition-management company that offers an independent third-party tuition installment plan.
Another option is to use a private student loan to help fill a college savings gap. Be sure to shop around to find the best features and interest rates.