By Charlestien Harris
Whew! You’ve gotten them through high school, and now college tuition is on your horizon. If you or your child is entering college this semester, the tuition bill will arrive soon – if you haven’t received it already!
Paying for your child’s tuition can be intimidating, but there are ways to better manage it. Most schools offer a tuition payment plan that allows you to stretch out payments over the semester or school year. Making smaller payments over time may enable you to pay from your monthly income rather than taking out loans. Here are a few suggestions you might want to consider:
- Don’t borrow more than you can afford. If you or your child plan to borrow to pay for school, make sure you’re not taking on more debt than you can afford. While federal student loan rates are lower than last year, there’s virtually no limit on the amount parents can borrow for Parent PLUS loans. A good rule of thumb: Parents shouldn’t borrow more than their annual income to cover all their children’s college costs.
- Use alternative methods to pay for tuition. Do your homework! Make sure you understand the rules and guidelines for using the 529 funds you may have access to. If you’re accessing money in a 529 account, be careful how you withdraw it. You could incur penalties and taxes if you spend the money on unqualified expenses. Be sure to check with your state’s issuing agency for details on how and what the money can be used for when it comes to qualified educational expenses.
- Take full advantage of payment plans. As suggested in my opening paragraph, many institutions offer tuition payment plans. It doesn’t hurt to ask. If the school offers a plan, make sure you understand the terms and conditions, and have a strategy for making those scheduled payments on time. Students and parents can sign up for a tuition payment plan through the bursar’s office, cashier’s office, or college financial aid office. Each college typically contracts with only one tuition installment plan provider, although some colleges manage their own monthly payment plan. When it comes to paying for college, a payment plan may be the best option to spread fees out over the course of a year or semester by breaking them down into more manageable payments. It’s like living on a budget – you need to ensure the funds are available when the payment is due.
- Watch out for “junk” or “add-on” fees. Some schools may charge a fee for payment plans, while others may allow students or parents to pay for room and board in installments without a fee. Payment plans may also not require a credit check, which can help students avoid impacting their credit, but some others will require a credit check. Be aware that this inquiry may drop your credit score, which could significantly impact both the student and your financial health.
- Online payment is another option, but use caution. This is a quick and easy way to pay your tuition, and you’ll receive an immediate receipt. However, some payment methods, like credit or debit cards, may have fees, and you also run the risk of identity theft or being charged hefty fees for the convenience of paying online. While most of these sites or services advertise as secure, be very careful about which sites you share your personal financial information with.
- Don’t forget to take full advantage of financial aid options. This can include grants, scholarships, and other sources of funding that can help you pay for tuition, room and board, and other expenses. Scholarships and grants don’t need to be repaid, and you can combine multiple awards to reduce your costs. I have used all the above options to cover my children’s college tuition costs. The FAFSA application is a great place to start when it comes to utilizing this option. This standard form is used by financial aid offices on college campuses to determine how much financial aid a student is eligible to receive. It also helps to screen students for financial “need” when it comes to scholarships offered by the school and outside scholarship requirements.
Paying college tuition can take a huge chunk out of your budget, but when you sit down and develop a plan to tackle this expense, it can make all the difference in keeping your budget intact!
For more information on this and other financial topics, visit www.banksouthern.com/blog. You can also email me at Charlestien.Harris@banksouthern.com or call me at 662-624-5776.
Until next week – stay financially fit!