written by: gaddisac•edited by: Noreen Gunnell•updated: 6/29/2011
Afraid of paying for college tuition? If financial aid or loans aren't available, college payment plans can help students and parents pay off tuition costs in installments.
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After a student has been accepted to a college or university and signed up for classes, they will receive a bill for tuition and other college costs. These costs are usually billed in the beginning of the semester and presented as one lump sum, which can sometimes be several thousand dollars. If a student does not have their tuition covered by financial aid or loans, this tuition bill is due in the first weeks of the semester. But students and parents shouldn’t fear! Many universities offer a college payment plan so that students can pay tuition and fees in installments over a period of time.
A college payment plan, also called a tuition payment plan, is a contract between a student and a college that allows the student to pay off tuition costs in installments. Usually, a college payment plan is a short term contract, which means that college costs need to be paid off in less than twelve months. Installments are usually equal payments due monthly or on another schedule. A college payment plan can be a good alternative for students or parents who do not qualify for financial aid and cannot afford to pay tuition in one large sum at the beginning of the semester. Many colleges offer different payment options to pay off tuition in installments.
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In this type of college payment plan, the costs for the entire semester are split evenly into twelve equal monthly payments. On one hand, this can be a good option because these monthly payments can be low. However, many colleges charge processing or interest fees with this type of plan, so students or parents can end up paying more in the long run.
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In a deferred payment plan, tuition payments are put off, or deferred, until a later date. Some deferred payment plans can include the entire tuition cost for all the credit hours needed for a degree at the current tuition rates, which is broken up into monthly payments for four years. Some deferred payment plans also require a down payment before monthly payments are billed. With many deferred payment plans, direct withdrawals can be set up so that monthly payments are made automatically from a credit card or checking account.
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Through Financial Institutions
While many universities offer payment plans through their financial aid departments, there are also independent financial institutions who can provide college payment plans. If parents already have a college savings account with a bank, they can talk to that bank about financing tuition payment plans. Payment plans from private financial institutions are usually in the form of a loan for the amount of the tuition bill, which is paid off in payments over a certain period of time. Parents should check with the loan holders for their big items like houses and cars to see if they offer loans or payment plans for college tuition.