It's Time to Pay Your College Tuition Bill
If you’re headed to college this fall, the first day of school may seem far off. But there’s an important task coming up on your to-do list: Paying your tuition bill.
The fall semester tuition deadline is August 1 at many colleges. Schools typically send an email that payment is due, with a link to an online portal so that you can view the statement and pay online. School communications go to the student, not parents, so make sure you know the deadline if you're a parent paying the bill.
Steps to Take Before You Pay Tuition
If you haven't already, there is still time to reduce the amount you'll have to pay out-of-pocket to the college.
Update your FAFSA. The Free Application for Federal Student Aid (FAFSA) determines your eligibility for federal financial aid as well as money from states, colleges, and many scholarship programs. If you filed the FAFSA before you submitted your taxes, use the IRS data retrieval tool to update your financial information. If you don't, your aid may be flagged for verification which can hold up disbursement. If you haven't filed a FAFSA, it's not too late. You can apply for aid until the end of the school year.
Some good news if you are borrowing: Interest rates on federal student loans, which are set each July 1 and fixed for the life of the loan, are at historic lows. The rates apply only to new borrowers, not to existing loans or private loans. Undergraduate loans now charge an interest of 3.76 percent, down from 4.29 percent last year. “You’ll really see the impact when you start repaying the loan,” says Karen McCarthy, director of policy analysis at the National Association of Student Financial Aid Administrators.
Complete your financial aid paperwork. Financial aid is credited to your tuition bill but if you haven't finished the paperwork, it may not appear. You’ll need to sign a master promissory note, in which you promise to repay your loan and any accrued interest and fees to the U.S. Department of Education. You are also required to do loan counseling to understand terms and conditions of the loan, either in person or online.
What to Look for When the Tuition Bill Arrives
When you review the bill, it should show you tuition, room and board, and fees for things such as student activities as well as any credits that will reduce the amount you have to pay.
Check that any credits are correct. You should see credits for financial aid, scholarships, loans, and grants—whatever applies to you. Don't expect to see work-study credits there—you'll be paid for that directly.
Look for unnecessary charges. The bill may include charges for services you don't need such as an expensive meal plan (there may be a less expensive option) and health insurance (staying on a parent's plan could be cheaper than going with the school's insurance plan).
If You Need Help Making the Payment
If you've received financial aid and reduced as many unnecessary charges to the bill as you can but are still struggling to cover the costs, there are still some options to consider.
Apply for a Parent PLUS loan. If the financial aid you receive isn't enough to help you cover the bill, consider taking out a federally subsidized Parent PLUS loan, which almost everyone qualifies for. It requires a basic credit check and comes with a fixed rate—the rate on a PLUS loan is now 6.31 percent. Although Parent PLUS loans have more protections than private loans, they don't have as many repayment options as direct federal student loans.
"It’s better not to borrow," says Kathy Ruby, director of college finance for College Coach, a college admission and financing consulting service. “You may find you have more money for tuition when you aren’t paying for sports activities and can buy fewer groceries."
Take your child off your car insurance policy. If your child won't need a car in college, you could consider taking him or her off your car insurance policy, which would reduce your premium. You could put the difference towards tuition.
Sign up for an installment plan. Rather than paying the college a lump sum, most schools offer payment plans with no interest, though there may be small fees or finance charges if you fall behind.
What to Do If You Get a Refund
If it turns out that the billed charges are less than the financial aid you receive, the school will issue you a refund at the beginning of the semester. You can request a check or have the funds directly deposited to your bank account.
Carefully consider where to deposit the refund. Be aware that some schools have relationships with banks, credit unions, and other financial services companies and will offer you a banking account to manage your financial aid and your savings. Those accounts can charge hefty fees, so you may want to consider other options.
Save the refund for future tuition expenses. If you don’t need the money for living expenses or other related school costs, put it aside for future tuition bills. College costs are only likely to go up, so the more money you save, the less you have to borrow down the road.
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