August has arrived, and with it comes the inevitable fall payment deadline from your college.
In a perfect world, families would have a plan for paying for all eight (or more) semesters, not just the next one that's due, says Shannon Vasconcelos, a college finance consultant with advising service College Coach.
But the reality is that there are plenty of families who are making last-minute decisions about how they'll meet the deadline for paying off their students' fall tuition and room and board balances. In fact, online search trends over the past six years show that searches for "financial aid appeal" start climbing in July before peaking in mid-August.
So is it too late to ask your college for more money if you can't afford your bill?
Yes and no.
Colleges technically accept financial aid appeals year-round, but your chances of being successful are far slimmer now than they were in April. If you've experienced some change in financial circumstances or there's something you didn't originally share with the college—say, a job loss or high medical bills—you should certainly tell the college now.
At this point, though, most colleges will probably deny the request even if you have a valid reason because they've already exhausted their financial aid for the year.
So if a successful appeal is unlikely, what options are left? These steps can help you pull together a plan.
Start by figuring out your gap and identifying why it exists. Was there some unforeseen circumstance between last spring and August that affected your income and cash flow? Was it simply poor financial planning? Knowing what you need to come up with and why you don't have it now will help you triage the options that are available to you. A family that needs to come up with $1,500 to pay for a more expensive residence hall and an extra course, for example, will have more options than a family that has to fill a $10,000 gap.
It's also important to find out when you absolutely have to pay the money by. Most colleges say that tuition bills are due during the first week of August, but late fees often won't kick in until the semester actually starts a month later, says Paula Bishop, who advises families on paying for college. Missing that August 1 due date may be an option for a family that has a temporary cash shortfall while waiting on a check. But you will need to ask what effect a late payment will have on the student's ability to register for classes.
Finally, if you read the options below, you'll pick up on a consistent tip: Ask your college's financial aid office. That is always a solid first step (and sometimes a necessary follow-up step), especially with the clock ticking on the due date.
Option 1: Borrow more money
Parents often tell Bishop they don't want their child borrowing money for college. But if you have a gap you need to fill, federal undergraduate student loans are a no-brainer. They're the cheapest loans available to students, with fixed interest rates at 3.76% this year. There's also a cap (between $5,500 and $7,500 annually depending on the year in school) to keep students from over borrowing, and they offer the most flexible repayment options.
If you or your child already took the maximum in federal student loans, a federal direct PLUS loan, which allows parents to borrow up to the entire cost of attendance, is your next best option. Parents can apply at Studentloans.gov, and the application process takes less than 10 minutes, says Vasconcelos, who previously worked as a financial aid officer at Boston and Tufts universities. Even if you turned down federal loans last spring or took out less than you were offered, you can still re-apply for more.
Federal undergraduate student loans or PLUS loans are also best for those in a time crunch. Colleges usually receive notification of approval within a day, Vasconcelos says.
Families could shop around for a private education loan, but they involve more extensive credit checks, and it can take a few weeks for loans to be completely approved. What's more, only families with the best credit backgrounds with get rates that compete with the federal government's 6.4% interest rate.
Note that the federal government splits loan awards between two semesters, so if you're looking to cover an $8,000 tab for the fall, you need to borrow $16,000. For parent loans, you also need to factor in a 4.27% origination fee, Vasconcelos says. So, again, if you need exactly $8,000 for the semester, you need to borrow $16,715, of which $713.75 would be taken out in fees. You can talk with the financial aid office to figure out the exact amount you need to borrow to meet you balance due.
A word of warning: Just because you can borrow up to the total cost of attendance doesn't mean you should. You need to consider college expenses on a four-year horizon. Monthly payments on a one-time $10,000 loan for the fall may seem manageable. But multiply that by eight semesters, and you're looking at an $80,000 debt, with monthly payments that will top $900 a month.
In other words, "if you're struggling to come up with one semester's payment, how are you going to come up with another seven?" Vasconcelos asks.
Option 2: Sign up for an installment plan
At least 80% of four-year colleges offer a tuition payment plan, according to the data they report to Peterson's. Colleges that offer longer plans, with 10- or 12-month payment periods, may have start dates in the summer, meaning you already should have signed up and started paying. You can probably sign up for the plan late, but you should be prepared to make a month or two of catch-up payments immediately. Other colleges, such as the University of Akron, have a four-part installment plan that starts in August, and you can still sign up for it. Note that payment plans are generally interest-free, but they carry a small sign-up fee (usually less than $100).
Option 3: Ask about special programs, such as emergency aid or targeted scholarships
Growing numbers of colleges are starting emergency or micro grant programs to help students overcome relatively small financial barriers. Many of these programs are promoted by word of mouth; a faculty member or financial aid office staffer may recommend a student they know is struggling financially. Still, it can't hurt to contact the financial aid office and ask if you would qualify.
Be aware that these dollars are limited and are usually targeted to specific types of students, often those who are nearing graduation. At the University of Akron, for example, the Retention and Completion Initiative was designed to help students in danger of dropping out. Since the program started in 2013, the university, with 21,000 undergraduates, has awarded $415,000 to 406 students, for an average award of just over $1,000.
This year, the university is also starting the Akron Attainment Award, a grant program that's designed to fill the funding gap for students who've exhausted other scholarship and loan programs and whose parents don't qualify for federal loans. So far the university has identified five eligible students for the fall semester, says Jennifer Harpham, director of student financial aid.
For those students, a parental contribution really isn't possible, but for most middle-income families, Harpham says families have to assume that the student will need some kind of parent help.