Most college students will have to borrow one or more student loans before they graduate, because there aren’t enough government grants to cover all college costs. There are more than $100 billion in new student loans made each year and more than $1 trillion in student loan debt outstanding.
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Tuition Payment Plans
Tuition payment plans can be a great option to pay for higher education. As the spotlight continues to shine on college affordability and excessive student loan debt, many families are seeking more ways to manage the costs.
What Is a Tuition Payment Plan?
Tuition payment plans spread out college fees into installments so you can pay over time (usually up to one year) instead of making one lump sum payment. They can also be a great alternative to borrowing loans. A tuition payment plan splits college bills into equal monthly or academic term payments. Since the installments are smaller, paying for college out of pocket may be doable for some families.
For the most part, tuition payment plans carry a low fee or finance charge that rarely exceeds more than $100-$200. But unlike loans, there is no interest.
Most plans restrict the payments to just the direct costs paid to the college or university, such as tuition and fees and, in some cases, campus-owned/controlled housing and meal plans. And most tuition payment plans allow the family to set up an automatic transfer from a bank account to pay the installment payments.
Alternative to Federal Student Loans
Tuition installment plans are a less-expensive alternative to federal or private student loans, or incurring long-term debt in general. This is because there are no interest charges and installments are paid over a period of 12 months or less instead of a lengthy repayment period. And unlike loans, most tuition payment plans do not require a credit check.
Here’s an example of what a tuition payment plan might look like:
$12,600 tuition bill
9 monthly installment payments of $1,400 each
Add a $100 enrollment fee for a total amount paid of $12,700
This table compares the cost of a tuition installment plan with a Parent PLUS loan, assuming that the fees for both are paid up-front. Using a tuition installment plan saves the family approximately $5,000 in interest and fees.
| Short-Term vs. Long-Term Financing | Tuition Payment Plan | Parent PLUS Loan |
|---|---|---|
| Amount Financed | $12,600 | $12,600 |
| Interest Rate | N/A | 7.6% |
| Fees | $100 | $531.26 (4.264%) |
| Repayment Term | 9 months | 10 years |
| Monthly Payment | $1,400 | $157 |
| Total Payments | $12,700 | $18,786 |
| Total Payments (First Year) | $12,700 | $1,884 |
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).
Stride Funding: Explore income share agreements, a flexible way for students to pay for their education with no interest payments. Learn More About Stride Funding
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:
- ECSI Tuition Payment Plan (TPP)
- FACTS Tuition Management – Acquired by Nelnet in 2005
- Tuition Management Systems (TMS) – Acquired by First Marblehead in 2010
- University Accounting Service (UAS) – A subsidiary of NCO
- Variable Rates: 1.13% APR - 11.23% APR. Fixed Rates: 3.50% APR - 12.60% APR. Lowest rates shown include the auto debit discount.1
- Choose from multiple repayment options, including no payments while in school1
- No origination fee or prepayment penalty2
- Cover up to 100% of your school-certified college expenses like tuition, fees, books, housing, meals, travel, and even a laptop for the entire school year3
- The only undergraduate student loan that offers 4 months of Chegg® study help 4
This loan is for undergraduate students at participating degree-granting schools. Students who are not U.S. citizens or U.S. permanent residents must reside in the U.S., attend a participating school in the U.S., apply with a creditworthy cosigner (who must be a U.S. citizen or U.S. permanent resident) and provide an unexpired government-issued photo ID to verify their identity. Applications are subject to a requested minimum loan amount of $1,000. Current credit and other eligibility criteria apply.
1Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. Payments may be required during the grace/separation period depending on the repayment option selected. Variable rates may increase over the life of the loan. Advertised variable rates reflect the starting range of rates and may vary outside of that range over the life of the loan. Advertised APRs assume a $10,000 loan to a borrower who attends school for 4 years and has no prior Sallie Mae loans. The borrower or cosigner must enroll in auto debit through Sallie Mae to receive a 0.25 percentage point interest rate reduction benefit. This benefit applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment, if available for the loan.
2Although we do not charge a penalty or fee if you prepay your loan, any prepayment will be applied as outlined in your promissory note-first to Unpaid Fees and costs, then to Unpaid Interest, and then to Current Principal.
3Loan amount cannot exceed the cost of attendance less financial aid received as certified by the school. Sallie Mae reserves the right to approve a lower loan amount than the school-certified amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half time.
4This promotional benefit is provided at no cost to borrowers with undergraduate or parent loans with a first disbursement between May 1, 2021 and April 30, 2022. Borrowers are not eligible to activate the benefit until July 1, 2021. Borrowers who reside in, attend school in, or borrow for a student attending school in Maine are not eligible for this benefit. Chegg Study® offers expert Q&A where students can submit up to 20 questions per month. No cash value. Terms and Conditions apply. Please visit http://www.chegg.com/legal/smtermsandconditions for complete details. This offer expires one year after issuance.
Information advertised valid as of 9/27/2021
SALLIE MAE RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS, SERVICES, AND BENEFITS AT ANY TIME WITHOUT NOTICE. CHECK SALLIEMAE.COM FOR THE MOST UP-TO-DATE PRODUCT INFORMATION.
Sallie Mae, the Sallie Mae logo, and other Sallie Mae names and logos are service marks or registered service marks of Sallie Mae Bank. All other names and logos used are the trademarks or service marks of their respective owners.
Sallie Mae loans are made by Sallie Mae Bank.
Edvisors is not the creditor for these loans and is compensated by Sallie Mae for the referral of Sallie Mae loan customers.
© 2021 Sallie Mae Bank. All rights reserved. SLM Corporation and its subsidiaries, including Sallie Mae Bank are not sponsored by or agencies of the United States of America.
- Competitive fixed and variable APRs starting at 0.99%1
- Multiple repayment options including: full principal and interest, interest-only, deferred, and flat payment
- Flexible payment terms ranging from 5, 8, 10, and 15 years2
- Coverage up to 100% of your school-certified cost of attendance ($1,000 minimum)3
- No origination, application and processing fees, no fees for early repayment
- Apply online in 3 minutes and get an instant credit decision
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
2This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
3As certified by your school and less any other financial aid you might receive. Minimum $1,000.
Information advertised valid as of 10/21/2021. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.
What to Read Next
How to Pay for College Without Financial Aid
Federal Undergraduate Student Loans
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Most college students will have to borrow one or more student loans before they graduate, because there aren’t enough government grants to cover all college costs. There are more than $100 billion in new student loans made each year and more than $1 trillion in student loan debt outstanding.
Every additional dollar spent on student loan payments is a dollar less for other priorities, such as buying a house, getting married, or saving for retirement. There are several ways to reduce student loan debt.
Borrowers can reduce the amount of money spent on student loan payments by following several strategies before taking out loans and during repayment.
Paying for college without financial aid is difficult, but it’s not impossible. Here are 5 ways to pay for college without student loans or financial aid.
Free scholarships for college students can make college dreams come true. Check out Edvisors list of free scholarships and tools for making your scholarship search easier!
Learn more about scholarships for international students hoping to study in the United States.
Popular scholarships can be very generous. Students with the qualifications should apply for these awards knowing that the competition will be significant.
There are many ways to find scholarship opportunities if you know where to look. Here are some tips on how to get started.
Less-competitive scholarships are easier to win because fewer students apply.
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