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Any advantage to prepaying 1st semester tuition vs. using payment plan (esp. FAFSA-wise)

daylily2019daylily2019 1 replies1 postsRegistered User New Member

Newbie here with a question for folks who have a couple years of FAFSA experience.

My daughter is an incoming college freshman and we received our first semester tuition bill. I had planned on using the college's payment plan to pay monthly, but I am wondering if there would be any advantage to paying the first semester tuition in full up-front so that when we fill out the FAFSA renewal in October there would be less money in our savings to report as an asset.

I'm assuming they must factor that into their calculations for students who are sophomores and above (the fact that a certain chunk of a family's current assets will be spent in the current year towards tuition therefore leaving less money available for the following year) but I can't seem to find any information online to confirm that.

I know that income is a far bigger influence on the expected family contribution, but if it might make even just a couple hundred dollars difference, I figure it would be worth a try to see what happens.

Thanks in advance for any insights or advice.
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Replies to: Any advantage to prepaying 1st semester tuition vs. using payment plan (esp. FAFSA-wise)

  • Erin's DadErin's Dad 33021 replies3717 postsSuper Moderator Super Moderator
    Your (parents) savings only gets assessed at 6%. If you think that will make a difference then go ahead and pre-pay. Also you get out of the fee for using a payment plan.
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  • thumper1thumper1 73802 replies3218 postsRegistered User Senior Member
    Does your college guarantee to meet full need for all? If not...this savings balance might not affect need based aid....at. all.

    Also, if your parent income is above a certain threshold, this might not net you additional need based aid...at. all.

    In other words, your financial gymnastics might not really have any affect on your need based aid...at. all.
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  • gardenstategalgardenstategal 5494 replies10 postsRegistered User Senior Member
    Some schools require that you purchase tuition insurance if you use a payment plan (but it's unnecessary if they have your money upfront. ) So paying up front can save some money if that's the case. You would have to see whether this is a factor in your situation.
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  • brantlybrantly 3875 replies67 postsRegistered User Senior Member
    Simple: Don't fill out the FAFSA in October. Use the payment plan first semester, pay the second semester in full in January (usually it's due in January), THEN fill out FAFSA.
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  • thumper1thumper1 73802 replies3218 postsRegistered User Senior Member
    You can do as @brantly suggests UNLESS your kid gets any kind of limited per campus need based aid...things like work study and SEOG. These are awarded on a first come first serve basis...so if you don’t apply early, you might not get these awards in your need based package next year.

    I guess my question...if you HAVE the money to pay the semester in full...why would you use the payment plan at all?
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  • daylily2019daylily2019 1 replies1 postsRegistered User New Member
    Thank you all for your responses, it's interesting to see the different perspectives.

    To add a little context & answer some of the points folks are making, the 6% in this case is about $900. If I can knock that much off of our EFC next year, it would be worth it to me because, yes, the college guarantees it will meet full need.

    Saving the payment plan fee is also something I have considered. But it's only $35 per term so that's what was tempting me to spread out the payments.

    The idea of waiting to file the FAFSA in January is interesting, but I'd be way too nervous for that!

    To answer the question of "why wouldn't I"…as with any big ticket item, I'm simply taking a few moments to consider the pros and cons of the two payment options available to me. Spending a big sum all at once and depleting our savings isn't something I do often. It's hard to habit to set aside! I imagine the next few years will train me to part with my money a bit more, lol.

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