If I had a Top 10 list of frequently-asked questions, this would be on it. When are college costs actually due, and how do you pay them? Is that actually two questions?
Your first college payment is the deposit, paid when you accept admission — normally on or before May 1. Usually this is a nominal amount (relative to total college costs), typically up to $500. (Waitlisters: deposits are usually non-refundable, so accept admission somewhere even if you’re also on a waitlist elsewhere — and budget for two deposits just in case.)
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 and transit passes. (This is your opportunity to waive optional items you’re declining, such as campus health insurance if you’re already covered.) Students attending public colleges might see higher actual costs than in their original financial aid award letters, because many public colleges don’t release their actual tuition rates until state budgets are finalized in June — so the award letter may reflect the prior year’s tuition. Many colleges also charge more for on-campus room and board in the first term than in subsequent ones. If the room and board amount on your statement is higher than your financial aid award, reach out to the school to find out why.
Usually any institutional financial aid will show as “pending.” Another “pending” item: additional fees based on the student’s specific course selection — lab fees, fees for online materials, or anything else billed directly by the college. In our experience, you might receive bursar statements for such costs periodically over the course of the term. This statement is helpful for figuring out approximately how much you’ll need to pay so that you can start figuring out where it’s coming from: your 529 or other savings account, loans, or out of pocket.
If your student has an outside scholarship, it will be disbursed directly to the school, which will then allocate it equally across academic terms and make any required adjustments to 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 reduced grant aid or loss of work study or subsidized loans, depending on the school, so it’s a good idea to ask how your outside scholarship will affect the rest of the package. Also important: 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 will then receive income up to the work study limit.
Loans are 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 at a school on semesters, the school will receive $2,750 to apply to your costs. Any surplus is returned to the student only after all school costs are covered — often a few weeks after the start of the term, which can be difficult for students living off-campus who are using loans to cover books or rent. This year, loan disbursement timing warrants extra attention: the Trump administration announced a three-phase transition to move significant management of the federal student loan portfolio from the Department of Education to the Treasury Department. Transitions of this scale often introduce processing delays, so build in extra buffer time when planning your cash flow around loan disbursements.
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 has charged for it in subsequent years. Often payment plans cost $75-$100 per academic term, which can add $1,000 or more to the total cost of college. However, for families paying out of pocket from ongoing income, payment plans are probably cheaper than taking out loans.
Books, computers, and supplies 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 found that the required materials listed in the syllabus tended to overstate what’s actually needed by a wide margin. And often the professor offers a low-cost online version of the expensive textbook — but you won’t learn about that until class meets. (Side note: textbook publishers have largely moved to bundling online worksheets and materials with single-use codes, so used copies often don’t work for required digital components.)
Students living off-campus pay rent and buy groceries on an ongoing basis. 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 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 and then pay college costs directly. That way you don’t risk the school confusing a check from your 529 for an outside scholarship. You also probably won’t know exactly how much to pay until a couple of days before payment is due.
A couple of parent hacks: join the school’s Facebook parents page to get suggestions for money-saving strategies specific to your campus. Parents who have already navigated the same school can be a wealth of information. And if your student flies home for breaks, book Thanksgiving and winter break tickets early. Colleges publish academic calendars well in advance so you don’t have to guess when the breaks are.
