Part of the problem for families may not be the actual cost of college, but paying for it all in one lump sum at the beginning of the academic year. This is particularly true for families who have not saved for college, but have an income that causes a high Expected Family Contribution (EFC). To deal with this situation, many schools offer payment plans that allow the student or parent to begin making monthly payments before classes begin and continue throughout the academic year.
Students using this type of plan are allowed to register for classes each term, even if they have a balance, as long as they are current on their scheduled monthly payments. Schools may offer their own in-house options, or use a third-party company to handle this financing.
Typically, families can choose from a number of options, ranging from 6 to 12 months. A family with $7,000 in unmet need may be unable to come up with $3,500 at the beginning of each semester, and could end up with late payment and interest fees added to the balance. That same $7,000 spread out from the April before classes begin to the following April would allow the family to make payments of $583 each month, which would substantially reduce the "sticker shock" of $7,000 and could prevent additional fees.
Most payment plans require a family to be fully aware of their situation as early as possible so that payment arrangements can be finalized. Students should be encouraged to file the FAFSA as soon as possible after January 1 and contact the school's bursar for information about possible payment options.
Even More Ways to Pay for School
- Students may want to consider looking for colleges that offer a tuition reduction to alumni or siblings. A family may get a reduced tuition rate if they have two children attending at the same time. The same may be true of parents whose children will be attending the same school they themselves attended.
- Some colleges offer a four-year "locked-in" tuition rate. A guaranteed rate for four years may allow families to plan more efficiently.
- Students should consider taking Advanced Placement (AP) courses and exams in high school, and attending a school that offers the most AP credit toward a degree program. In some instances, a student who has done well in the AP program can gain a semester or more of academic credit.
- The College Level Examination Program (CLEP) can reduce the number of credit hours a returning adult student may need to complete by granting college credit for work experience. The fewer courses needed for degree completion, the less money that is needed to finance the program.
- Schools may offer reduced tuition during the summer session. A student may be able to complete required courses during the summer for a fraction of the cost charged during the regular academic year.
- Accelerated degree programs can help a student complete a traditional four-year degree in less time. Such a program may also combine an undergraduate degree with a graduate degree in a reduced timeframe.
- Many schools offer a "flat rate" of tuition for full-time study. Students can maximize the value of this by taking the maximum number of courses. For example, using a "flat rate" fee, a student taking 18 credit hours may be charged the same price as a student taking 12 credit hours.
- Students that live in on campus (dormitory) housing may save money by living off campus in an apartment.
Loan Repayment/Forgiveness Programs
Students who are willing to commit to working in Illinois for a specific amount of time after obtaining their degree, in a field that is experiencing a shortage of workers (for example, teaching or nursing) may qualify for a student loan repayment/forgiveness program. Both state and federal programs are available.
Alternative Loan Programs
All families should apply for federal, state, and institutional aid before considering the alternative (i.e., credit-based) loan sources. If the choice to borrow is made by students/parents, they should be encouraged to "shop around" and identify the program that best meets their financial needs. The student should contact the program administrator of the private loan program directly for information and an application. Here are some questions families should ask:
- Who is an eligible borrower?
- Is a cosigner required? Are there additional benefits with a cosigner?
- What are the annual limits and the aggregate limits?
- Is school certification required?
- What is the interest rate?
- Does interest have to be paid during in-school periods?
- Are any principal payments required during in-school periods?
- What is the minimum annual income required for a family to borrow?
- Is there a service fee?
- Is the loan based on credit-worthiness? If so, what is the debt-to-income ratio required?
- What is the origination/guarantee fee, if any?
- Are any other fees required for the loan?
- What are the repayment options, maximum lengths of time, and deferment options?
- How long is the process from application to receipt of funds?
- Who is the servicer?
- Are the loans sold?
- What are some of the other features?
- How will the loan be disbursed: to the student or school?
- Are there any deferment options?
Educational Financing Resource Checklist
When researching different types of financial aid, families should consult a variety of sources. By doing so, information on scholarships and loans offered by many different organizations can be gathered. Some sources to be considered are:
- The Illinois Student Assistance Commission -- information about all types of scholarship, grant and loan programs
- High School Counselor -- information about all types of financial aid, including local scholarship and loan sources
- Financial Aid Office -- information on institutional aid programs and alternative programs, as well as federal and state financial aid programs
- College Academic and Special Interest Departments -- awards for students majoring or pursuing a career in that field
- Public Library -- resource of reference material on financial aid programs, private scholarship services, and colleges
- Internet -- an additional source of on-line reference materials and scholarship search services
- Local Chamber of Commerce -- scholarships and loans offered by clubs and professional organizations
- Parents' Employers -- scholarship and loan programs for children of employees
- Banks and Credit Unions -- scholarship programs and information on savings plans and educational loans
- Corporations and Community Organizations -- scholarships and loans may be available within the community