An option that doesn’t get too much publicity in the world of paying for college is that of Tuition Payment Plans. Most families and students are consuming their time trying to find additional scholarships and grants that they don’t give much thought to how they are going to take care of the balance not covered by financial aid. This is where Tuition Payment Plans come in very handy and are a good option to consider.
I can almost guarantee you with complete certainty that every college and university has some sort of advertised monthly payment option for education expenses. Even if they don’t advertise one, if you call the Office of Student Accounts or Bursar’s Office they will typically set something up with you. If they are not that flexible and don’t have a monthly payment plan of some sort, then you may want to consider going elsewhere because that school is definitely not looking out for your best interest and trying to provide you with options when it comes to paying for your tuition expense. (again.. I have not encountered a school that doesn’t provide some sort of monthly payment option and I would be interested in hearing from anyone that has…)
Monthly payment plans come in multiple varieties. Some options allow you to spread you educational expenses over the entire academic year (usually 10-12 monthly payments) while others work on a semester/term basis and provide 3 to 5 monthly installments.
A lot of colleges and universities operate their payment plans in house while a good number of others outsource the service to a third party to manage. The most popular third party payment plan in the nation at this time is provided by a company called Tuition Management Systems. It was a small company started by the Dodd brothers a couple of decades ago and it has grown exponentially ever since. It has grown so much that KeyBank acquired them a couple of years ago to gain a large market share in the monthly payment plan industry. Similar third party payment plans are provided by Sallie Mae, NelNet, TouchNet, and CashNet. These are just a few of the larger ones and apparently you have to append “NET” to your name to be successful in the monthly payment plan industry… 😉
Regardless of whether your payment plan is managed in house or by a third party you will need to be mindful of a few things. The first is fees.. Every program has fees. They usually start out with an enrollment fee (most are less than $80..) and then they have other expenses in the form of late fees and penalty charges if for some reason you send your monthly payment late. The monthly payment plan is intended to be a low cost option for paying your tuition, however, if you tend to pay your bills late, the extra fees could set you back quite a bit. So..be sure to see what all the fees are before you enroll.
Secondly, the monthly payment plan provider (especially if it is a third party) does not know what your final costs are that you will owe the school after factoring in financial aid and optional loans. So, it is up to you to be diligent in figuring out that expense and budgeting it with your payment plan provider. If the payment plan is operated in house at the school, they should be able to easily help you come to your monthly payment figure. If your payment plan is operated by a third party, you still should be able to call the school and get a good estimate of what you should budget with your payment plan.
Lastly, budgets are susceptible to change. You may start the year with one budget for your monthly payment plan but if your student adds extra charges (bookstore charges, traffic tickets, discipline fines, etc…) to their account, you will need to submit the portion not covered by your payment plan directly to the school or you will need to adjust your remaining monthly payments to cover the difference.
This information should be a good start in informing you about monthly payment plans. Don’t hesitate to contact your college or university to find out how it works on their campus. If you have questions, you can also drop me a line anytime. I am always glad to help.