Pros And Cons Of Tuition Payment Plans
There are many students across America who aren’t able to pay their school’s academic session in full. Luckily, many public and private schools offer tuition payment plans. These allow you to pay for your tuition in installments, rather than in one go.
Read on to learn the benefits and disadvantages of tuition payment plans.
What Are Tuition Payment Plans?
A number of schools and colleges offer the option of a tuition payment plan for students who can’t pay the full academic amount. In such a situation, the tuition fee is mainly divided into installments so that the student can pay the tuition fee in smaller amounts each month. It’s considered better than a loan because it has no interest.
These payment plans can differ from one academic institute to another. While some institutions don’t offer installment plans beyond tuition, some may include housing and food costs as well. Many of the academic institutions have the option of automatically transferring the installment amount into their bank account each month. This saves a lot of hassle for both parties involved.
How Do Tuition Plans Work?
Tuition plans are much more simple than student loans or other credit offers. All you’ll need to do is to talk to your college and check if you’re eligible for the plan.
For instance, if you took out a student loan but it doesn’t cover the total cost for the semester. Let’s say you’re short by $6,000. If eligible, this amount can be broken down into 12 monthly installments. Hence, you don’t have to pay the total amount in bulk, but you can pay $500 each month.
Unlike the loan amount, you don’t have to pay any interest on this. Most importantly, the burden of paying it all at once is taken off.
Pros Of Tuition Payment Plans
There are multiple benefits to these plans:
- If you have a deficit of a certain amount, even after receiving federal aid, you can opt for a tuition payment plan to help cover the deficit in an affordable way
- There are many schools and colleges that offer a payment plan for just tuition fees. However, some schools also offer the plan for other factors such as housing and meal expenses
- Unlike loans or other credit options, interest isn’t charged on these plans
- You don’t need a credit score or co-signer for approval
- There are a lot of payment plans to choose from depending on your needs and financial hardship
- Compared to student loans, these installment plans are less expensive. In some cases, the school may charge you a modest upfront enrollment fee of $100 - $150
- Installments are usually spread over 12 months or less. For example, if you need $5,000 then you can request to pay $500 per month for ten months
- Most plans offer automatic withdrawal from the borrower’s credit card or bank account
Cons Of Tuition Payment Plans
Although installment plans are beneficial, there are a few downsides. These include:
- You may have to pay an upfront enrollment fee
- School or college may charge you a penalty for delayed or missed payments
- Additional service fees for these plans can add up to an extra 3% on your total bill
- The fees you pay aren’t eligible for the student loan interest deduction
- Most of these plans have a limited scope. Usually, they don’t cover any extra costs beyond tuition. Therefore, even if you use a plan, you’re still liable to cover the costs of supplies, books, and other expenses
How To Apply For A Tuition Payment Plan?
Different colleges have different tuition payment plans to help students. You can directly talk to your college’s office of financial aid to learn about the different options they have. Make sure you understand all the terms and conditions before applying.
Bottom Line
Tuition payment plans can be an excellent alternative if you don’t wish to take any further loans for your studies. A number of students who have received federal aid and still require money will apply for such plans.
You’ll still have to pay the amount, but the total will be broken down. Hence, payments will be more manageable and convenient.
