College Bills 101: Class is in session.

Written by
Emily Stetson

Date
July 24, 2019

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image of student studying

Students heading to college or training in the fall may have a month before they arrive on campus, but there’s one “to do” that is just ahead: Paying the fall semester tuition bill. For many students (and parents), that deadline can seem overwhelming, especially if you’ll need a student loan to cover any gaps between your financial aid and what’s due. Most Vermont families (nearly 7 out of 10) will need to borrow, so you’re not alone.

At VSAC we understand that paying for college, and student loans in particular, can be complicated. There’s a lot to consider. We want to help make it easier for you. Our goal: to help students and parents better understand the details and their choices so they borrow only what they need and minimize their cost of borrowing. We want to help families know more so they can borrow less.

If you’re facing a college bill for the fall, this list can help you feel confident you’re taking the right steps (and not missing anything):

  1. Find your bill and your deadline: Depending on your school, the deadline for paying the fall semester bill may be as early as August 1. And take note: Colleges typically send an email to the student, not the parent, that a payment is due, with a link to an online portal to view the statement and pay online. Late fees can be costly, so make a plan now to be sure you’ll pay the bill on time.
  2. Decode your bill. College bills typically show charges for the semester, as well as any credits that reduce the amount you owe.
  • Check your charges. These include tuition, room and board, and any fees (student activity fees, lab fees, specific program fees). Costs for transportation, books, and personal items are not included — you’ll need to budget and pay for those separately.
  • Look for unnecessary fees. Health insurance may be charged if the student doesn’t verify coverage on a parent’s plan. Or your bill may include a more expensive meal plan than what you need. Make sure you understand exactly what you’re paying for.
  • Confirm your financial aid “credits.” Your financial aid notification specified what you would receive in grants and scholarships (that is, free “gift” aid that doesn’t have to be paid back). If a grant or scholarship you received is not listed, check with the financial aid office on how that will be applied and any steps you need to take. Will you receive work-study funds? Find out how those will be paid to you. If you haven’t applied for free federal aid or a Vermont grant, you still have time. Fill out the FAFSA at fafsa.ed.gov and the Vermont grant at vsac.org/grants. Find out more at vsac.org/fafsafirst.)

3. Create a payment strategy. You can use a combination of sources to pay what’s left after applying your credits:

  • Determine what you’ll cover using savings and current income: Savings, such as funds in a 529 college savings plan, can reduce what you need to borrow. Also consider what you can pay as you go, using income from a student’s part-time job or a parent’s income. Check out tuition payment plans to determine if there’s an amount you can pay each month to spread out what you owe. Ask your college for details.  
  • Borrow only what you need. Maximize federal student loans (that is, federal loans in the student’s name). Those amounts should be credited to your bill. Borrow the maximum in these student loans first, as they have low rates and favorable repayment options. But remember: All loans are borrowed money that must be repaid, with interest. It’s fine to accept less of the amount offered or decline other loans that a school offers. While it’s tempting say “yes” to everything offered on your financial aid notification, just because you can, that doesn’t mean you should.
  1. If you still have a funding gap, be “loan smart”: If you need additional education loans, choosing the right one for your situation is essential to making college more affordable. Taking time to compare now will go a long way toward making a good choice that may be with you for 10 or 15 years: Know more. Borrow less.
    • Compare carefully. Student loans are NOT created equal. After accepting the maximum offered in federal Direct student loans (loans taken in the student’s name), pause and compare all other loans that may be available from other lenders, including, nonprofit lenders such as VSAC. Consider interest rates, fees, and repayment options and how they will impact what you will ultimately pay. A few things to keep in mind:
      •  Many banks advertise a range of rates (variable and fixed) but few borrowers will qualify for the lowest rate. Make sure you know the rate you’re offered before you finalize a loan. If you don’t get the rate you expected, cancel your application and shop around.
      •  While federal loans for students offer favorable rates and repayment terms, the federal PLUS loan for parents (which may be listed on your financial aid notification) offers a higher rate than many other lenders. Compare all your loan options before simply “checking the box” for PLUS on your financial aid offer.
      •  Think a few percentage points won’t really matter? Think again. The differences can really add up over the life of the loan. Get the full rundown of what to consider and learn how to compare at vsac.org/loans.
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  • Learn about VSAC’s student and parent loans for undergraduate and graduate education. VSAC has been helping families save, plan and pay for college and career training since 1965. For the 2019-2020 academic year, VSAC is pleased to offer a fixed rate as low as 4.79% APR — lower than the federal PLUS parent loan and our lowest fixed rate ever. VSAC education loans can be used by Vermont residents going to programs anywhere in the U.S. or internationally AND for any students attending a Vermont school. If you’ve already maximized available federal Direct student loans, a VSAC loan may be your lowest-cost option.

Still have questions or need more information? Contact us — that’s why we’re here. Call to speak with a Vermont-based counselor Monday-Friday, 8 a.m. to 4:30 p.m. at 800-226-1029; or send us an email to info@vsac.org.