On July 1, most colleges and universities will send the first-semester bill for the Academic Year 2020-2021. This bill will be for all new students in the Class of 2024 and those returning to the campus.

Upon arrival, the bill signals the culmination of a student and family’s hard work to find, select, and enroll in the college or university of their choice. But are you ready to pay the bill?

The bill sent from the Student Accounts-Bursars Office may look like the Financial Aid Award. It generally discloses the total cost of attending, minus tuition assistance awarded, and the net cost due by the student (family). A bill will come for the Fall and Spring separately. Below is an example of a full semester – September to May.

While appeals for additional tuition assistance may still be in the process due to COVID-19, it is essential for each student and their parent(s) to work to finalize their payment strategy. Resolving the bill now will eliminate stress and anxiety going into the summer.

How Will You Pay the Bill?

Financing resources at this time of the year generally shift from institution aid to personal resources, external scholarships, and self-help (loans and work). Which financing resource to use will depend on the availability of immediate, differed (loan) payment, or work-study.

Immediate Resources – College savings accounts, 529 Plans, or other investment programs, when available, are perfect resources to use to meet college costs. There specific use, when, and how much should be with the family’s financial planner, reviewed with the family’s financial planner. Note: The use of retirement savings is a major no-no!

Tuition Payment Plan- Interest-free payment plans offered through the college or university allow a student/family to pay all or a portion of the net tuition. Regular monthly payments equal to five, eight, or ten are made over a semester or year. All payment plans require a one-time application fee. Plans are administered on behalf of the school by a third-party provider—information on a school’s specific payment plan found on each institution’s website.

Federal PLUS Loan – PLUS loans are available to parents of dependent students who are attending on at least a half time basis. The loan can be used to fund all or a portion of the total remaining tuition cost. A PLUS Loan is a credit-driven loan program that requires no income, asset, or collateral requirement. Repayment begins within 45 days of the full disbursement with repayment factor over a five to ten year period. The interest rate for the academic year 2020-2021 will equal 5.02%.

Private Alternative Loan – Many colleges work with specific lenders and organizations that provide additional loan resources for students and families to use to meet college costs.  Alternative loans are credit driven programs with each lender maintaining their eligibility criteria, including interest rates, credit criteria, and repayment provisions. Most plans call for incoming first-year students to secure a credit-worthy co-borrower, who can be a parent or grandparent. Loans enter repayment within 30-45 days from full disbursement or deferred until the student graduates or leaves school.

Personal Saving and Resources-  Most financial experts recommend that families do not touch personal savings or other resources such as retirement savings until they have investigated and exhausted all federal and private financial aid resources. Families should consult with the Financial Aid staff at their college to discuss eligibility.

.Due to the current pandemic, all students and families must address the need to finalize college financing plans now. Credit criteria, lender access, and overall availability of resources may be subject to change in the coming months.

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