The traditional financial aid package – grants, scholarships, and loans – isn’t your only option when it comes to paying for college. Tuition financing and payment plans can help make overwhelming tuition bills more manageable, and help you avoid long-term debt.
A college degree is worth it for many students, so it’s a good idea to learn how to pay for the costs of your education. If you’re searching for online colleges with payment plans and low monthly payments, this might be a great option for you!
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Let’s explore the questions: How do online colleges work with students needing tuition payment plans? What are the pros and cons? What are your options?
What Is a Tuition Payment Plan and How Does It Work?
A tuition payment plan is just what it sounds like: a payment plan to help you pay for college. With online colleges with low monthly payments, you can avoid paying a huge tuition bill at the beginning of each year or semester, and instead pay smaller, more affordable installments over a longer period of time.
Imagine that after your grants and scholarships are applied, your annual tuition cost is $10,000. Most students or families cannot come up with $10,000 all at once, or even $5000 at the start of each semester. With a tuition payment plan, you won’t have to make the entire payment at once; instead, you can spread it out.
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For example you may be able to pay $1000 each month for 10 months. Whether the payments are broken up into monthly installments, into semesters or by percentages will vary by school and/or payment plan, but the idea is the same: to make your tuition payment more manageable.
Tuition payment plans generally do not charge any interest, but instead may have a small enrollment fee (usually $30 to $100). Payments can be made automatically, directly from your bank account, for your convenience. Some plans also allow you to pay by credit card, but they often charge a steeper fee.
What Expenses Do Tuition Payment Plans Cover?
Most tuition payment plans cover only the direct costs billed by the school (i.e. just the tuition). However, there are some plans that will assist with the costs of any books, supplies and equipment necessary for your online education.
Be sure you understand the limitations of a plan before enrolling.
Why Choose a Tuition Payment Plan Rather than a Loan?
If you’re able to make a sizable payment (but can’t necessarily pay the whole tuition bill), a tuition payment plan is a much better option than taking on student loans.
Let’s again imagine your annual tuition payment is $10,000. If you took out a 10-year student loan at 5%, you would pay a total of $12,727.86 over the course of the ten years. If you opted instead to pay the $10,000 in monthly installments with a $100 enrollment fee, you would total $10,100. That’s a savings of $2627.86.
In addition to saving thousands of dollars on interest, payment plans ensure you are able to graduate debt free. That peace of mind is incredibly valuable, and something you will thank yourself for later!
When Should I Start Looking for a Tuition Payment Plan?
Once you begin to narrow down your list of colleges and compare tuition and financial aid packages, it’s a good time to consider tuition payment plans.
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Make note of the most affordable online colleges with payment plans, and what kind of schedule they offer, so that you can accurately compare your options. If you choose an online college that does not offer a tuition installment plan, ask the financial aid office if they can refer you to a tuition management company that offers an independent third-party tuition installment plan.
Who Should I Talk to About Enrolling in a Tuition Payment Plan?
It depends. If the tuition payment plan is offered by and administered by your school, then the school’s financial aid office should be able to help answer your questions.
However, if the school contracts its payment plans through a third party, contacting that company directly may be the best way to get accurate information about the plan.
Are Monthly Payment Plans a Good Idea?
Tuition payment plans are a good solution for many students, but other students may find they just can’t work it into their budgets. Check out these pros and cons to see whether a payment plan is right for you.
Pros of College Payment Plans
- Enables you to spread a large tuition payment over several months
- The enrollment fees are lower than the interest rates on student loans
- Convenient payments (often by automatic withdrawal)
- No interest
- No credit check necessary
- No debt to follow you after graduation
Cons of College Payment Plans
- Having to pay while still in school, rather than after you have graduated
- Enrollment fees (usually $30 to $100)
- Some plans do not accept payments via credit card, or charge an additional fee for them
- Fees are not tax deductible (whereas student loan interest is tax deductible)
As you can see, there are many advantages in a tuition payment plan. If you are able to work the payments into your budget comfortably, this option can be a great savings for you and help you graduate without long-term debt.
But if the payments are a stretch or present a financial hardship, don’t do it! Instead, you should look for additional grants and scholarships, talk to the financial aid office, and resort to student loans if necessary. You should never agree to a payment plan that you can’t afford!
What are the Different Types of Tuition Payment Plans?
There are four different types of payment plans that may be offered by your online school.
- Standard Payment Plan – The standard tuition payment plan is just what we have been talking about, which is sort of a “pay as you go” college plan. The overall cost is broken down into smaller installments, such as monthly payments, and you pay an upfront enrollment fee.
- Deferred Payment Plan – A deferred payment plan can be one of two things. It could just be the name the school uses for its standard tuition payment plan. Or, it could be a slightly different variation in which you pay two or three payments on scheduled dates, rather than small monthly payments. For example, at New York University, the Deferred Payment Plan breaks the semester into three payments: a 50% initial payment that’s due before the semester starts, a 25% second payment due mid-way through the semester, and a 25% final payment due before the semester ends.
- Tuition Stabilization Plan – This plan is designed to protect you from future tuition increases. It allows you to pre-pay for four to eight semesters, at the current tuition rate. This can save you a lot of money in the long run, but will require you to have a lot of money upfront. If you want to “lock in” the current tuition rate for the next two years, you will have to pay for two years of your education immediately; you cannot make partial payments with the Tuition Stabilization Plan.
- Direct Bill Plan – This simply means that the school will directly bill a third party, such as your employer, for your tuition. If the third party is not covering the entire tuition amount, you will be responsible for the remainder of the tuition, and must pay that before classes begin.
How Do I Choose a Plan Provider?
You probably won’t have to make this decision. While some schools offer their own payment plans, most use the services of outside providers.
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Most schools contract with just one provider and offer only one plan, so you won’t likely have to do any shopping around. For reference, some of the most popular tuition payment plan providers include:
- ECSI Tuition Payment Plan (TPP)
- FACTS Tuition Management
- Nelnet Campus Commerce (formerly Tuition Management Systems)
- TuitionPay
- University Accounting Service (UAS)
Remember, though, just because a school does not offer payment plans doesn’t mean they aren’t an option! If the online school you choose does not offer tuition payment plans, ask the financial aid office to refer you to a tuition management company that can help you set up an installment plan.
