Tuition Payment Plans

A tuition payment plan or tuition installment plan splits college bills into equal monthly or academic term payments. Since the installments are smaller, paying college bills may be easier and more convenient than making a single, larger lump-sum payment.

Most restrict the payments to just the direct costs paid to the college, such as tuition and fees and, in some cases, campus-owned/controlled housing and meal plans.

Most tuition payment plans allow the family to set up an automatic transfer from a bank account to pay the installment payments.

Alternative to Long-Term Debt

Tuition installment plans are a less-expensive alternative to incurring long-term debt. The installments are paid over periods of a year or less in total duration. Most tuition payment plans do not require a credit check. Tuition installment plans do not charge any interest, but may charge an up-front fee that is usually less than $150. For example, a tuition payment plan might let a parent pay a college's $12,600 tuition bill in 9 monthly installment payments of $1,400 each. Including a $100 enrollment fee, the total amount paid is $12,700.

This table compares the cost of a tuition installment plan with a Federal Parent PLUS loan, assuming that the fees for both are paid up-front. Using a tuition installment plan saves the family about $5,000 in interest and fees.

Short-Term vs. Long-Term Financing Tuition Payment Plan Federal Parent PLUS Loan
Amount Financed $12,600 $12,600
Interest Rate N/A 7.21%
Fees $100 $540 (4.288%)
Repayment Term 9 months 10 years
Monthly Payment $1,400 $148
Total Payments $12,700 $18,260
   Total Payments (First Year) $12,700 $2,312
   Annual Payments (Subsequent Years) $0 $1,772

Tuition payment plans are especially popular among middle and high-income families at higher-cost colleges. These plans are also helpful for families of all income levels who want to better manage their monthly cash-flow (budgets).

Tuition Installment Plan Providers

Students and parents can sign up for a tuition payment plan through the bursar's office, cashier's office or the college financial aid office. Each college typically contracts with only one tuition installment plan provider. Some colleges manage their own monthly payment plan.

The most popular providers of tuition installment plans include: