It can be challenging to pay for a whole semester of college in one lump sum. So many colleges offer tuition payment plans that allow you to pay your bill over time. Here's how they work.
Like a No-Interest Loan
Deferred tuition payment plans, also known as tuition installment plans, are a convenience to help you manage college expenses, particularly if you have trouble paying a whole year's tuition at once. Tuition paid in installments must normally be paid off by the end of the relevant academic period, such as a semester or academic year, and most such plans do not charge interest if you pay by check or direct deposit. However, like loans, you must have a good credit history to qualify for them.
The Tuition Deferment Process
Don't show up on the first day of classes expecting to automatically qualify for such a plan. You should discuss any payment plans beforehand with your college. The plan may be handled by a private company or by the college. In either case you will usually pay a relatively small service fee and, if appropriate, late fees. The first payment of an installment plan is normally due at registration and may be the largest. If you enroll at a college that does not offer such a plan, its financial aid office may be able to refer you to a private commercial tuition management company that does.
Beware Hidden Costs
Installment plans can end up costing you more in the long run if you drop out or transfer to another college. Because the college expects costs to go up each year, payments in the first two years of college may be larger than they would be otherwise. An additional cost may also result if you pay by credit card. Some plans charge a fee for this service, as high as nearly three percent. To determine your college's policy, check with its bursar's office.
Tuition payment plans are not for everybody, but it's good to know they're available if you need them. It's one more way colleges try to help you pay for your education.
Note: Financial information provided on this site is of a general nature and may not apply to your situation. Contact a financial or tax advisor before acting on such information.