When I was a young man I remember my dad using this exclamation a number of times- “Where The Rubber Meets The Road”. At that time, I wasn’t really sure the meaning of it but as I grew older and wiser (and heard other people use the same phrasing), I realized the true intent of that saying (or so I think). I am fairly certain the analogy is referencing a free spinning car tire and what happens when that tire comes in contact with the pavement. So basically, “where the rubber meets the road” is just another way of saying that something is going to happen, or something needs to happen, or something did happen.  Whichever way you look at it, you had better be prepared.

By this time you should have applied to the colleges of your choosing, received the all important financial aid packages, discerned the best fit school, and made your commitment (via an enrollment deposit) sometime last week. Congratulations! What happens now? – Good question!

The way I see it, you have a couple of options. You can take the summer off and worry about college in a couple of months -OR- you can take a proactive approach to making sure you have your financial ducks in a row when it comes to your paying for college options. I am hoping that you would choose the latter!

Since you know all the costs associated with next year’s college experience and you have received your financial aid award to tell you how much to deduct, you should have a good grasp of what is expected of you (from a financial standpoint) for the coming year. Knowing this, let’s see what your payment options look like.

• Paying As You Go: This is probably the most common of options and most families seem to prefer this method. If your costs for the coming year are going to be $10,000 (made up number – yours may be higher or lower) and you have two semesters in your academic year (Fall & Spring), then you can expect to receive a bill for approximately $5000 for each semester.
• Monthly Payment Plans: Just about every school has some sort of monthly payment plan. The purpose of this program is to help families spread out their educational expenses over the span of the entire academic year.
• Education Loans: This should be your last resort but after you have exhausted the first two options (above), an education loan may be needed to help cover any remaining costs. You should maximize all your federal loan options first (student & parent) and then you can start looking at private loan options.

Now that you have a good grasp of your payment options, spend some time at the kitchen table with mom and dad and lay out your plan of attack for taking care of next year’s college tuition. Once you have that step completed, go ahead and enjoy the rest of your summer and know that you have taken the required initiative to eliminate any potential friction that may be caused from “the rubber meeting the road”.

Don’t you wish everything in life could be solved in three steps or less?  It sure would make things a heck of a lot easier. While paying for college probably deserves more attention than three steps can provide, I am going to attempt to give you the quickest solution known to mankind for covering your tuition expenses.. and yes.. it will not surpass three steps.

The Made Up Situation

You just got your tuition bill in the mail for the first semester of classes and it says that you owe the University $10,000. Most people would gasp at this dollar amount but you chose to go to Princeton and $10,000 a semester is a pretty good deal after you factor in all your financial aid. Since this is your first semester and you plan on going to classes next semester, you can probably count on another $10,000 bill before the end of the year. So your total college expense billed through the University for the year will be $20,000. Now that we know what figure we are working with, let’s go ahead and see what your options are when it comes to paying this bill (besides check or cash).

The Three Step Approach To Paying Your Tuition Bill

1. The Pay In Full Each Semester Bill Approach: This type of billing has been adopted by universities far and near and basically it allows the family to pay for each semester (in full) as the billing is generated. The majority of families pay for education in this manner and they usually utilize two sources to make these payments – savings or discretionary income. Based upon your “Made Up Situation” above, you can send in the check for $10,000 and feel resolved that you have done your part (financially) for the semester and eagerly await the mailing of your next billing statement. If step one doesn’t solve your tuition woes, then you should certainly move onto option two and see if it helps to provide light at the end of the tunnel (and no the light is not a train!)
2. Monthly Payment Plan Approach: Most colleges and universities have some sort of monthly payment plan that they can provide for their families. Some are managed in-house and others utilize a third party to process the payments. Regardless of how they provide this option, it is definitely something for you to consider. My experience with monthly payment plans show that they don’t charge interest but they do usually have a nominal enrollment fee. Most payment plans can span over the entire academic year which typically is about ten months. Based upon the arbitrary payment amount above ($10,000 a semester), you would want to budget $20,000 on your monthly payment plan, or $2000 a month for a ten month plan. Still not providing a cure to your tuition bill blues? Let’s move onto step three!
3. Education Loans Make Ends Meet Approach: Not my favorite option by a long shot. However, if you are unable to take care of your tuition bill using options 1 and/or 2, then it is time to look at additional education loans. My advice would be that you exhaust federal loan programs 1st and then as a last resort start looking at private options… including your local credit unions

Ok.. that is it.. the three step approach to paying your tuition bill. But wait! I have one more option if you are eager and/or interested.

The A La Carte Approach To Paying Your Tuition Bill

You are used to A La Carte in the lunch line when you get to pick and choose form the menu what you are going to eat for the day. Why not apply the same principle to paying for tuition? What if you are able to choose and mix and match from the three options above to find a way to cover your tuition bill? Sound like a good idea? Surprisingly, most schools will be “ok” with this approach.. as long as you do it right. Let’s take the $20,000 figure and come up with a quick scenario of how this can work.

1. Option 1 (Pay In Full): I can’t afford to pay $10,000 each semester but my checkbook says that I can do about $2,500 a semester. Based upon that figure, that leaves me with $15,000 that I need to figure out how I am going to pay. Immediately, I look at option 2.
2. Option 2 (Monthly Payment Plan): $15,000 over ten months would be $1,500 a month. My budget dictates that I can do about $1,000 a month. $1,000 a month for ten months would be $10,000. My balance was $20,000 for the year and I am paying $5,0000 with option 1 and $10,000 with option 2. That leaves me with $5,000 unaccounted for and that is when I refer to option 3
3. Option 3 (loans): Since I am trying to pay as much as I can now (using options 1 & 2) and not maximizing my full loan eligibility, I only need to get a loan for $5000 to finish out the remainder of the tuition I will owe for the year.  Whew.. Glad that is over! Now onto more import things – like studying and going to class!

As you can imagine, I came up with that tuition payment scenario and situation very quickly. What you will want to do is sit down as a family and have that kitchen table conversation utilizing your numbers and figures and come up with the option(s) that works best for you. When you take the time and effort to make these decisions as a family it will benefit all involved (mom, dad, and student!).

Hope you found this article helpful. If you know of anyone else that can benefit from this information, please be sure to pass this along using the “share tab” below. Also, if you have any questions related to paying or saving for college or the financial aid process, don’t hesitate to contact CheapScholar. I always enjoy hearing from our readers.

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.