I’d put this question on my top 10 list of frequently-asked questions. When are college costs actually due, and how do you pay them? Is that actually two questions?
Your first college payment is the deposit which is paid when you accept admission on or before May 1. Usually this is a nominal (relative to college costs) amount, typically ranging up to $500. (Waitlisters: this is usually not refundable and you should accept admission somewhere even if you’re accepting a waitlist spot elsewhere, so factor two deposits into your budget.)
Your normal college costs are then divided between academic terms, though not always equally. Colleges typically send out an estimated statement a month or so before school starts. This will show the estimated total direct-billed costs– tuition, fees, room and board for on-campus students, and other items the university includes such as health insurance, transit passes, and more. (This is your opportunity to make sure you’ve waived optional items that you are declining such as campus health insurance if you already have insurance coverage.) Usually any institutional financial aid will show as “pending.” Another “pending” item: additional fees based on the student’s specific course selection, whether lab fees, fees for online materials or anything else billed directly by the college; in our experience these can show up periodically over the course of the term. This statement is helpful for figuring out approximately how much you’re going to need to pay so that you can start figuring out where it’s going to come from– savings, loans, out of pocket.
If your student has an outside scholarship, it will be disbursed directly to the school at which point the school will allocate it equally across academic terms and adjust any need-based aid. That means a student with a $3,000 outside scholarship attending a school on quarters will get $1,000 per quarter credited to their bill. Aid adjustments due to outside scholarships often happen at the last minute and can result in either reduced grant aid or loss of work study or subsidized loans, depending on the school, so it’s a good idea to reach out and ask how your outside scholarship will affect the rest of the package. Also important to note: any work study in the student’s award is there strictly for calculation purposes. The student still needs to find a work study job and then will receive income from that job up to the work study limit. (It is at the discretion of the work study employer whether they continue to employ the student once they’ve earned the maximum work study amount.)
Loans are also allocated equally across academic terms and disbursed directly to the school. That means if you’re taking out the direct student loan as a freshman and attending a school that’s on semesters, the school will receive $2,750 to apply to your costs. Only after all school costs are covered is any surplus returned to the student. This often takes a few weeks after the start of the term, which can be difficult for students living off-campus who are using loans to pay for books or room and board, so it’s something to plan for.
Most schools require all costs for the term to be paid upfront, and most also offer payment plans. Those plans may or may not have fees associated with them, and those fees can change from year to year. For example, my son’s school charges a fee for payment plans for tuition but allows room and board to be paid in three installments without a fee. My daughter’s school offered a monthly payment plan at no cost her first year but this year is charging for it. Often payment plans cost $75-$100 per academic term, which can add $1,000 or more to the cost of college.
Books, computers, etc., are the student’s responsibility. My recommendation: wait until after the first class session to buy books, no matter what the nice man in the bookstore tells you. Both my kids have found that the required materials in the syllabus tend to overstate the required materials by a substantial margin. And often the professor offers a low-cost online version of the expensive book– but you won’t learn about that until class meets. (Side note: textbook publishers have wised up to used books and now often integrate online worksheets and materials with single-use codes that require the student to buy a new copy of the book.)
Students living off-campus pay rent and buy groceries on an ongoing basis, needless to say. 529 funds can be used to cover these expenses up to the lesser of actual costs or the school’s off-campus living allowance. That means that if your school’s off-campus living allowance is $12,000 annually and you spend $13,000 on rent and food, only $12,000 is “qualified” or eligible for 529 withdrawals. Likewise, if you only spent $11,000, only $11,000 is “qualified.”
You can choose to have your 529 funds sent directly to the school. However, my recommendation is to withdraw them in your student’s name, then pay college costs directly. That way you don’t risk having the school confuse a check from your 529 as an outside scholarship. Plus, you probably won’t know exactly how much to pay until a couple of days before the payment is due.