Updated April 25, 2023
Pay Your College Bill Over Time
Paying the college tuition bill is a daunting task for most families. One way to ease some of the pain of writing that check is to pay in installments, or pay as you go. This will not lower your college costs, but can make it slightly easier on your family’s cash flow needs to cover the college tab.
What is a College Tuition Payment Plan?
Tuition Payment Plans break up the costs of college into monthly or periodic payments. They are also called Tuition Installment Plans or Deferred Payment Plans. By signing up for a plan, you can avoid having to make a large lump sum payment before each semester begins. Instead, you can pay down the cost for the semester with payments from your monthly income or cash flow.
Features and benefits of tuition payment plans
The total cost for each semester or academic period is divided into multiple installments. It is common for the first installment to be a larger amount than the remaining payments, which would be of equal amounts.
A significant benefit of most college tuition payment plans is that they do not charge interest if you pay by check or ACH. This is a great reason to take advantage of these plans.
By the end of the semester or academic period, you do need to have paid the total amount in full.
What are the terms and costs associated with the plans?
The majority of plans run for a semester and cover the cost of that academic period including tuition and fees. Some schools will also include housing and meal plans whereas others do not. Books, supplies, and transportation are generally not covered under these plans.
You typically register for the plan and pay a non-refundable enrollment fee per semester. Many of the enrollment fees are in the range of $30-$100. For example, the University of Maryland Terp Payment Plan enrollment fee is $45.
At the time of registration, you will specify how you are going to make plan payments. This may be by check or via direct electronic payment or ACH or by authorizing recurring credit card or debit card payments. Although some schools self-manage their tuition payment plans, many schools use a third-party provider to help administer the plans. A couple of those providers include Nelnet and ECSI.
Some plans will add a service fee to each payment. This is definitely something to check for in the fine print. Some service fees are as high as 3%.
Additionally, some plans charge a higher amount when credit or debit cards are used as a payment method.
Almost all plans incur late fees if you do not keep up with the terms of the agreement. Late fees can be fairly high. For example, The Ohio State University payment plan charges penalties up to $300. You may want to set up a recurring electronic payment in order to avoid late fees and penalties.
Which schools offer tuition payment plans?
Most schools offer a payment plan, however, not all do. For example, the University of Florida does not currently offer a formal tuition payment plan. For schools that do, there is generally only one plan. Plan terms will vary by school.
Schools that are more expensive will be more likely to offer a plan because they recognize the cost can be challenging and the financial situation of their student’s families varies.
Here are a few examples of schools and their plans:
Most state schools offer a plan, such as The Ohio State University Tuition Option Payment Plan enrollment fee is $30 and payments occur every 30 days.
Ole Miss has no enrollment fee, however, there are only three payments that are front-loaded near the beginning of the semester.
Rice University, a private school in Houston, TX, has a $75 enrollment fee and four monthly payments.
Reducing Student Loan Debt
Having some flexibility in how you make your tuition payments – by choosing to use a payment plan or paying the full amount on your own or taking out a loan, gives you some control in the process. Therefore, if your personal situation allows, being able to cash-flow tuition payments, whether for one semester or all, affords the opportunity to avoid student or parent loans for those semesters, thereby saving you on your overall out-of-pocket college costs in the long run.
Although not a solution for everyone, tuition payment plans allow families to manage paying for college on a pay as you go basis.
Research payment plan requirements and disclosures carefully for each school on your list so you can avoid unnecessary fees and maximize the benefits for your budget and your family.
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