Payment Plans Designed to Help Students Afford College Online Colleges Offering Flexible Monthly Tuition Payments

Much of the attention given to paying for college revolves around financial aid such as grants, scholarships and loans. While the discussion about financial aid is deserved, that doesn’t mean it’s the only ways current and prospective college students can pay for the cost of college. Tuition payment plans and knowing which schools offer the “biggest educational bang for your tuition buck” can help students pay for and afford college.

Tuition Payment Plan Basics

Many prospective students know to look into financial aid to help pay for college, but not as many are aware of tuition payment plans, let alone how they work.

  • Where to get help

    Some tuition payment plans are offered through the school, although many of these schools use a third-party tuition payment plan company to administer the process. If the school offers and administers the tuition payment plan, requests for assistance should be directed to the school itself, but if the school uses a third party, contacting the company directly is the best course of action.

  • Why monthly payments make sense

    Even though an individual or organization (such as a company offering tuition reimbursement employment benefits) may be able to afford paying the cost of tuition in one lump sum, it can drastically help cash flow concerns if the upfront cost can be spread out over several months.

  • Who needs a payment plan

    The situations of students taking advantage of a tuition payment plan vary. Perhaps it’s a financially challenged family relying on grants, scholarships and school loans to pay for most of the college education, but owe a few thousand dollars to make up the difference between the true cost of college attendance and the total financial aid package. Or maybe it’s a middle-income family with disposable income of only a few thousand dollars a month – not enough to pay $20,000 in a single upfront payment in the fall of each year. The family can use the tuition payment plan for a small fee to avoid a loan.

  • When to start looking into payment plans

    Prospective students and families interested in enrolling in a tuition payment plan should look into them at the same time they’re looking at financial aid options and possibilities. However, tuition payment plans should be on a lower priority than securing financial aid, whether it’s a scholarship, grant, work study or loan. It’s not often when a tuition payment plan will turn a completely unaffordable school into an affordable one, but at the very least, it will make paying tuition costs more manageable.

Payment Plans Available Directly through the School

  • Standard Plans

    A tuition payment plan allows the student to spread out tuition payment over several months instead of providing a full tuition payment at one time. For example, if a student’s annual tuition cost is $15,000 per year, instead paying $15,000 at the beginning of the school year or $7,500 at the beginning of each semester, the student will have the $15,000 fee broken up over several months. This may be 10 months for two semesters and five months for a single semester. In this example, the student would make 10 $1,500 monthly payments or five $1,500 monthly payments in a semester plan.

    Not only does a tuition payment plan spread out the tuition costs over a much longer period, it’s cheaper than obtaining alternative financing. This is because tuition payment plans charge no interest, just a small enrollment fee, which is far less than any interest charges the student would otherwise have to pay with a conventional student loan.

  • Deferred Plans

    Some schools call their standard tuition payment plan a “deferred payment plan” or a “deferred plan,” but it works the same way as a standard tuition payment plan. In other schools, the deferred payment plan is actually a different plan where the tuition payment is split up into two or three payments. For example, at NYU, the fall semester’s tuition is broken up into three payments. Fifty percent is due in in the summer, 25 percent is due in the middle of the fall semester and 25 percent is due near the end of the fall semester.

    Just like the standard tuition payment plan, a deferred plan requires a small enrollment fee, which is the same or comparable to a standard tuition payment plan enrollment fee. However, unlike standard tuition payment plans, schools may charge interest if the final payment is not made on time.

  • Tuition Stabilization Plans

    A tuition stabilization plan protects students against future tuition rate hikes. Instead of paying for each semester or school year at the beginning of each term, the student will pay for several semesters all at once. Most schools require students who want to take advantage of a tuition stabilization plan to prepay for a minimum of four semesters, but no more than eight semesters. The tuition stabilization plan applies to the cost of tuition only.

  • Direct Bill Plans

    Direct bill plans are useful when a third party, such as an employer, is paying for the student’s tuition. These plans allow the school to directly bill the third party instead of the student. Additionally, the direct bill plans allow the third party several weeks into the school term before the full tuition payment must be made. Even though direct bill allows someone other than the student to pay for tuition, the student is still responsible for ensuring tuition has been paid in full by the deadlines.

Service Companies Offering Tuition Payment Plans

Many schools offer tuition payment plans but don’t administer the plan themselves. Instead, they outsource the payment plan processing to a tuition payment plan company. There are several popular service companies available; here are a few.

  • Higher One

    Sometimes referred to as TuitionPay, Higher One is one of the major tuition payment plan service companies that administer tuition payment plans on behalf of schools. The exact process will depend on the school’s requirements, but typically, payments are made in three, five or 10 increments for an enrollment fee. The payment methods will depend on the school, but a check or electronic debit from a checking account are two common options.

  • Nelnet Business Solutions

    Nelnet Business Solutions provides a school-specific webpage with plan details for each school. There are also instructions on how to enroll, which usually begins by signing up on the school’s website.

  • Tuition Management Systems (TMS)

    Another popular company is TMS. Similar to Higher One and Nelnet Business Solutions in that its tuition payment plan options will depend on the participating school’s details, TMS is unique in that it offers BorrowSmart, a special program that allows students to combine a tuition payment plan with a traditional school loan. Every month, the student’s monthly payment will include both a loan payment and tuition payment.

10 Colleges Offering Online Degrees and Payment Plans

  • The City University of New York (CUNY)

    CUNY is the city of New York’s public university system. It has two special schools offering online degrees and programs: John Jay College of Criminal Justice and the School of Professional Studies. CUNY’s tuition payment plan is administered by Nelnet Business Solutions and allows students to pay their tuition over the semester.

  • McKinley College

    McKinley College offers 11 online associate degree programs in various business and healthcare areas. McKinley College’s tuition payment plan is different from most in that an outstanding balance does not prevent students from registering for additional classes.

  • New York University (NYU)

    NYU is an elite university offering hundreds of courses either completely online or in a blended format. NYU has many certificate and degree programs offered completely online as well. It offers several tuition payment plan options, including traditional and deferred. The traditional tuition payment plan is administered by Higher One with a $50 enrollment fee.

  • Rutgers University

    Rutgers offers a number of complete online degree programs including nursing, engineering, business administration, accounting and public administration. Rutger’s tuition payment is run by Tuition Management Systems and has a $60 per year or $50 per semester enrollment fee.

  • University of Arizona

    For students seeking a wide range of online degree and certificate possibilities, the University of Arizona is a good choice. Online programs include communication, history and industrial engineering. The University of Arizona offers its own deferred payment plan which allows students to split up their semester tuition payment into three payments at a cost of $75 per semester.

  • University of Nebraska – Lincoln

    The University of Nebraska is a leading public state university with both undergraduate and graduate online programs. Nelnet Business Solutions administers the deferred tuition payment plan. It charges a $20 enrollment per semester and offers three total payments over the course of a semester.

  • University of North Dakota (UND)

    At UND, students can choose from a large selection of online courses, certificates and degree options in areas such as electrical engineering, nursing, aviation, teaching and public health. UND’s tuition payment plan is run by Higher One. In addition to tuition, UND allows students to include books, room and board in the payment plan. However, student fees and rent cannot be included.

  • Valdosta State University (VSU)

    VSU offers SmartPath Core, which provides students an efficient way to complete the core components of their degree online. Students can choose from a wide range of graduate, undergraduate and certificate online programs. VSU’s tuition payment plan is administered by Nelnet Business Solutions, requires a down payment, and an enrollment fee of either $60 or $70, depending on when the student enrolls.

  • Villanova University

    Most academic offerings are on campus, but Villanova University also has an extensive number of online degree and certificate offerings in engineering, nursing, professional studies, business and law. Villanova University’s tuition payment plan is administered by Tuition Management Systems with a $45 and $70 enrollment fee for semester and full year payment plans, respectively.

  • Western Michigan University (WMU)

    A largely traditional university, WMU offers several dozen undergraduate and graduate degrees and certificates online, such as nursing, art education and gerontology. WMU’s tuition payment plan provides students the choice between making four or six payments over the semester. The enrollment fee is $35 per semester.

What happens if you don’t make your payments?

The consequences for not making payments will depend on each school and how a payment is missed. If a payment is submitted, but it is returned for insufficient funds, there will usually be an additional fee, often around $30 or so. Additionally, the school might reserve the right to terminate the tuition payment plan if a payment is returned on multiple occasions. Once the tuition payment plan is terminated, any remaining balance will be immediately due.

When a student misses a payment, a common result is the imposition of a monthly late fee for each month the payment is late plus a hold placed on the student’s account, which will prevent them from registering for classes or graduating.

College Cost Roundup

When people think about college costs, the first thing that comes to mind is tuition. But in many cases, other significant costs can rival tuition in terms of financial burden on the student. And often, financial aid or scholarships will not cover these costs.

Housing

This may be larger than the cost of tuition for some schools. The cost of housing will be especially notable for schools in expensive urban centers, such as New York City and San Francisco. Even if a student lives on campus in a dorm, the cost of housing can easily exceed $10,000 per school year.

Cost of Living (besides housing)

Food, clothing, cell phone bill, entertainment, gas and insurance are all expenses that usually required to live in today’s modern society. And depending on the living arrangements before college, many students had their parents to pay for some of these costs. But now that it’s on the student to pay for these items, they quickly realize it adds up to thousands of dollars each school year.

School Fees

These fees are quite common and can include fees for matriculation, technology, graduation and health services. And these fees can be up to several hundred dollars each. Fees are effectively forms of tuition that the school simply labels as something else. When comparing the true costs of attendance among different schools, students should carefully identify all fees to obtain a clear picture of how much a school really costs.

School Supplies

Depending on what the student wants to study and what they already possess before entering school, the cost of school supplies can be significant. For example, a student taking art classes might need supplies that can easily cost hundreds of dollars. Most students will need a personal computer for school, and even a basic laptop can cost hundreds as well.

Books

Here’s a notorious school cost that will frustrate most students, especially since it’s so hard to understand exactly why a simple textbook costs $200. And for a typical semester, a student can expect to spend over $1,000 for books they will never read again after the class is over. Luckily, many of these books can be sold back to the bookstore once the course is completed.

Resources for Understanding College Costs

The US Department of Education’s College Affordability and Transparency Center is an excellent online resource that allows prospective students to more effectively compare schools based on their costs of attendance. The following is a list of available tools from the College Affordability and Transparency Center:

  • College Scorecard

    This tool helps users determine a school’s true cost

  • Net Price Calculator Center

    This calculator tool helps students calculate a school’s net price after factoring in financial aid.

  • College Navigator

    A search tool that allows users to search for schools based on a variety of factors, such as majors, size and cost.

  • College Affordability and Transparency List

    A comprehensive list of schools ranked by net prices, tuition and fees.

  • 90/10 Information

    Lists for-profit schools that receive more than 90% of their revenue from Title IV federal financial aid.

  • State Spending Charts

    Provides overview information on how states are valuing their colleges and universities by examining how much state money is being spent for these costs.

Other online resources to help determine the true cost of attendance of college:

  • Consumer Financial Protection Bureau

    The CFSB offers a calculator that allows the comparison of up to three colleges or universities on the basis of cost of attendance and financial aid.

  • EFC Calculator

    A student’s Expect Family Contribution, or EFC, is a measure of a family’s ability to help their child pay for college. The EFC is the basis on which most financial aid is awarded.

  • FAFSA4caster

    A free financial aid calculator that allows users to obtain a preliminary estimate of what kind of federal student aid award they can expect to receive.

  • Sperling’s Best Places Compare Cost of Living Calculator

    There are many costs of living calculators online, but this is one of the more comprehensive ones available. It allows user to calculate how much it will cost to live in a specific geographical area.

  • Student Loan Calculator

    This tool helps individuals understand what they can expect to pay in monthly student loan payments after graduation.

Making Online College Affordable

We have compiled a list of the most affordable online four-year colleges, considering factors such as graduation rate, student-teacher ratio and percentage of student receiving financial aid. However, the list below ranks the top 20 public, four-year schools serving non-specific student populations in the U.S. by lowest net price.

Rank School In-State Net Price after Scholarships & Grants 2013-2014 State
1 South Texas College $1320 TX
2 California State University-Dominguez Hills $1640 CA
3 Indian River State College $1807 FL
4 CUNY Lehman College $2327 NY
5 Palm Beach State College $2467 FL
6 Elizabeth City State University $2490 NC
7 California State University-Los Angeles $2735 CA
8 University of Texas-Pan American $3006 TX
9 Chipola College $4418 FL
10 Gulf Coast State College $4577 FL
11 Texas A&M International University $4639 TX
12 Lake-Sumter State College $4653 FL
13 Florida Gateway College $4677 FL
14 Clover Park Technical College $4807 WA
15 Seattle Central College $4953 WA
16 Daytona State College $5064 FL
17 Brazosport College $5178 TX
18 Peninsula College $5246 WA
19 South Florida State College $5436 FL
20 California State University-Fullerton $5542 CA

Source: College Affordability and Transparency Center

What Makes College Affordable?

Besides getting scholarships and grants to pay for college, below is a list considerations to weigh when seeking out an affordable college.

Research possible tuition rate hikes

College tuition is notorious for rapidly rising in recent years, but not all schools have increased their tuition at the same rate. Choosing a school that won’t raise tuition rates, or at least provide an opportunity to lock in rates (such as with a tuition stabilization plan), can help make college cheaper.

Look at how many students receive financial aid

Many schools have scary tuitions, but what those numbers fail to show is that often, these “expensive” schools offer an extremely large amount of financial aid. As a result, the average student may be billed $40,000 a year for tuition, but due to scholarships, work study and low interest loans, they only have to pay a few thousand per year for the difference in the scholarship amount and financial aid award.

Investigate schools that accept college credit from other sources

Having a few dozen credit hours on a college transcript before even setting foot on campus can be very cost effective. Advanced Placement courses are free to take in high school; the exam is a minimal fee compared to the cost of the college class. And credits from a local community college are a fraction of the cost of the same courses at nearby major universities.

Consider online college

Online schools once lacked the prestige of a traditional on-campus school. Not so anymore, with many upper tier private and public universities providing fully online degree programs. Not only are the cost per credit hour rates often lower, but it can help a student avoid certain college costs such as room and board, as well as travel expenses.

Negotiate for more scholarship money

A few students are lucky enough to have multiple scholarship offers from a few of their choice schools. If the first-choice school isn’t offering as much money as another school, the student can inform the first-choice school of this situation. The student simply explains they want to attend the first-choice school, but they may settle with enrolling in the second-choice school due to a higher scholarship award. Sometimes the first-choice school will bump up their scholarship offer to match (and sometimes exceed) the second-choice school in order to entice the student to commit to them.

From the Experts

Michael Lux is an Indianapolis, Indiana attorney and the founder of The Student Loan Sherpa, a website dedicated to student loan education, strategy and borrower advocacy.

Sean Moore is a Certified Financial Planner practitioner and Charted Financial Consultant who has been serving families nationwide for more than 17 years. His business, SMART College Funding specializes in helping families of all ages and incomes reduce college expenses. As a college planning expert, Moore has been featured in both local and national publications including U.S. News & World Report, Forbes, Business Insider, Market Watch, Yahoo Finance, Investopedia and others.

Many students have tight finances. What do you think of tuition payment plans?

Michael Lux

If students are using a payment plan as an alternative to borrowing student loans it is an excellent idea. Student loans often come with origination fees that are charged the day the loan is disbursed and lenders start charging interest from day one. Working with your school to space out tuition payments is a great way to avoid unnecessary borrowing.

Sean Moore

Tuition payment plans can be a great option for students and their families as long as they are sure they can make the payments on time!

Most schools do not charge interest on their payment plans but there may be initiation, processing or other fees involved, so be sure to ask about the total cost of using a payment option. In addition, a single late payment may burden the student with additional fees or penalties and can delay or even prevent future enrollment!

Make sure you understand all the costs and consequences of using a payment plan before signing on the dotted line.

If you need to get into that certain class next semester and you aren’t’ sure that you can make your payments on time, a student loan may be a safer option that a payment plan.

I like payment options for parents helping students more than when used by the students themselves.

What are some “hidden” expenses that might surprise students once they are in college? Any advice on how to tackle those expenses?

Michael Lux

The cost of textbooks is absurd. Often professors will teach from a book that they wrote, and require students to have the latest edition. One of the best ways to save money is to ask your professor if they are ok with you buying a previous edition of the book. An older version can be bought very cheaply online. You can also save money by splitting the cost of a book with a classmate or trying to track one down using the library.

Sean Moore

Expenses that may surprise students aren’t usually “hidden” they just don’t seem to be a big deal until they sneak up on you.

These can include books, travel, insurance and food. All of these expenses are accounted for when a school publishes their Cost of Attendance but far too often families focus only on the big-ticket items like tuition and housing. Although schools include these costs in their COA, those are averages. Someone that lives across the country may have higher than normal travel costs. Eating off campus can make food costs soar.

Other costs not accounted for may include Greek life, study abroad, new clothing (think Florida student goes to Columbia, or Minnesota kid to USC), and off campus activities.

Advice to tackle these: Make a budget. Get the true TOTAL costs (COA is a good place to start) of your school. Assess your needs and adjust your budget upward from there.

What else should students know about college and finances?

Michael Lux

If you do borrow student loans, borrow as little as possible and, at minimum, pay the interest on the loans each month. In addition to keeping the balance at the original amount, these interest payments are an excellent reminder of the financial obligations you will have waiting for you after school. Far too many students and their families borrow student loans without an appreciation for how big the payments will be when they finish school. Finally, if you ever find yourself struggling to make payments, address the problem no matter how bleak things seem. Ignoring these issues will only cause them to get worse.

Sean Moore

Paying for college can seem daunting. As you narrow down your school choices, take the time to make a plan to understand how much you can afford to pay and how best to pay your share. By developing a solid plan, it is easier to make sound financial decisions when choosing your best choice college.