Are Tuition Payment Plans Worth the Risk? Not Always, Experts Warn

tuition payment plans

Tuition payment plans have long been a solution for college students who need help paying for the cost of higher education without taking on the burden of student loans. Recently, though, there have been questions about the value and risks of stretching out tuition payments across semesters.

Recently, the Consumer Financial Protection Bureau (CFPB) released a report warning students of the potential downfalls of tuition payment plans. Findings were a result of the bureau’s review of more than 400 colleges and universities in the United States. Here’s what to watch out for when considering a tuition payment plan:

  • Hidden fees such as enrollment fees, late fees, returned payment fees, and even interest in some cases
  • Severe consequences of missed payments, including withheld transcripts, loss of meal plans, and even housing cancellations
  • Lack of disclosure regarding the terms and conditions of tuition payment plans

So, are these tuition payment plans worth the risk? According to the CFPB, it depends on the school. Policies and procedures can vary widely depending on the institution you attend. For example, some schools may not charge fees for late payments while others impose fees of up to $300 per incident.  

The consumer watchdog recommends that students consider all options when it comes to financing tuition, including student loans and even credit cards. It’s also important to read the fine print and ask questions if you have them.

Related: How to Set Up a Tuition Payment Plan

According to the CFPB, schools often use different terminology to describe their tuition payment plans, which can be confusing for students. Worse, they may only disclose some of the stipulations and details of the agreement after students have already signed on the dotted line.

The bureau stops short of cautioning students against tuition repayment plans altogether. Instead, the recommendation is to find out exactly what you’re agreeing to before electing this type of college financing.

For more information, read the full report, entitled Tuition Plans in Higher Education.

Related: Affordable Online Colleges with Tuition Payment Plans