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College Bills 101: Review for 2nd semester costs
During the next month, students in college or training will be prepping for exams as they finish up the fall semester. But there’s another important “must do” that requires the attention of parents and students: Paying for spring semester.
Bills for 2nd semester typically arrive during November or early December. For some colleges, payment is due in full for spring semester as early as December 1. If you’ll be facing a college bill, it’s time to do a mid-year review to make sure you’ve taken the right steps (and are not missing anything).
At VSAC we understand that paying for college any time of year can seem overwhelming, especially if you’ll need a student loan to cover gaps between your financial aid and what’s due. If that’s your reaction, you’re not alone: Most Vermont families (nearly 7 out of 10) need to borrow to cover some part of college costs.
Our goal is to help students and parents better understand the details—and their choices—so they can cover all the costs, borrowing only what they need and minimizing their cost of borrowing. We want to help families know more so they can borrow less.
1. Find your bill and your deadline. Depending on your school, the deadline for paying the spring semester bill may be as early as December 1. Check the college’s website, and remind students to look for the bill and communicate all deadlines. Late fees can be costly; plan now how and when you’ll pay the bill.
2. Check what's due. College bills typically show charges for the semester, as well as any credits that reduce the amount you owe. Review all costs for accuracy.
- Review charges. These include tuition, room and board, and any fees (student activity fees, lab fees, specific program fees). Students living off campus should make sure they’ve budgeted for rent and food for the spring, as well as security deposits, renter’s insurance, and utilities (winter is here!).
- Consider hidden, missing, or adjusted costs. Will your rooming situation be the same for spring semester as it was for the fall? Make sure you aren’t due a room rate adjustment if you’ve changed your living situation. Same with your meal plan: Are you planning to spend the same amount, or are you switching plans? Also peruse your bill for hidden charges (such as health insurance if you’re already covered on your parent’s plan). And have you budgeted for transportation, books, and personal items? These won’t be shown on your bill—you’ll need to cover those separately.
- 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 for the spring term, check with the financial aid office on how that will be applied and any steps you need to take. Confirm how work-study funds will be paid for the spring semester, and when you need to apply for work-study positions. Find out more about free federal aid and the Vermont state grant at vsac.org/fafsafirst.
3. Create your payment strategy. You can use a combination of sources to pay what’s left after applying your credits:
- Use savings and current income. Savings, such as funds in a 529 college savings plan, can reduce what you need to borrow, and can pay for qualified expenses including books, off-campus housing and food, computers, and books in addition to tuition and room and board. Also consider what you can pay as you go, using income from a student’s part-time job or a parent’s income. Tuition payment plans can help you spread out what you owe and pay a monthly bill rather than all at once.
- 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 these student loans first before taking out other education loans, as they have low rates and favorable repayment options.
4. Be “loan smart”: Know more. Borrow less. If you need additional financing, compare and choose carefully. Education loans are NOT created equal. Consider interest rates, fees, and repayment options and how they will impact what you will ultimately pay. Remember: All loans are borrowed money that must be repaid, with interest.
- Beware of teaser rates. 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.
- Pause before taking on a PLUS loan. While federal loans for students offer favorable rates and repayment terms, the federal PLUS loan for parents offers a higher rate than many other lenders. For spring 2020, 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. If you’ve already maximized available federal Direct student loans, a VSAC loan may be your lowest-cost option. See for yourself: Get the full rundown of what to consider and learn how to compare at vsac.org/loans.
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 email@example.com.