Tuition Payment Plans
Tuition payment plans, also known as tuition installment plans, are a good alternative to long-term student loan debt. Tuition payment plans split college bills into more affordable, equal monthly installments throughout the academic term or academic year.
A tuition payment plan is a good option if you can’t afford to pay the college bill in a lump sum but can afford to pay the bill in smaller, monthly installments.
Limitations of Tuition Payment Plans
Tuition payment plans can be used to pay for only direct college costs as billed by the college. This includes tuition, required fees and — if the student is living in college housing — room and board.
Tuition installment plans cannot be used to pay for indirect costs, such as textbooks, transportation and off-campus rent.
Tuition Payment Plans vs. Student Loans
Tuition payment plans provide short-term cash flow assistance. Student loans provide long-term cash flow assistance.
Tuition payment plans are less expensive than student loans. Tuition payment plans do not charge interest; student loans do. Tuition payment plans charge an up-front fee that usually is less than $100. The fee on a tuition payment plan is usually less expensive than the origination and guarantee fees on student loans.
Thus, tuition payment plans are a good way of avoiding more expensive, long-term student loan debt.
Most tuition payment plans allow families to set up automatic monthly payments from a bank account, similar to student loans. They don’t provide an auto-debit discount.
Getting a Tuition Payment Plan
Most colleges offer tuition payment plans. Ask the bursar’s office if they offer a tuition payment plan. Some colleges offer tuition payment plans through the cashier’s office or the financial aid office instead of the bursar’s office.
The tuition payment plans are offered through a third-party provider. Some of the most popular providers include ECSI Tuition Payment Plan (TPP), FACTS Tuition Management, Tuition Management Systems (TMS), TuitionPay and University Accounting Service (UAS) (NCO). Education lenders own many providers of tuition payment plans. For example, FACTS Tuition Management is owned by Nelnet, Tuition Management Systems is owned by Cognition Financial and TuitionPay is owned by Sallie Mae.