When it comes to paying for college, the process can feel complicated, overwhelming, stressful, or even all of the above. Unfortunately, this is true long after you figure out where you're going to school and what your out-of-pocket expenses will be.
Students typically start the process by filling out the Free Application for Federal Student Aid (FAFSA) once it opens for the upcoming academic year. This typically happens on October 1st of the previous year before a new academic year begins, but the FAFSA opened late for the 2024-25 academic year.
Ideally, you will have filled out the FAFSA several months ago at this point regardless, and potentially even compared financial aid award letters and settled on a school. From here, there are a range of steps to follow and due dates to note that start during summer and continue into the second half of the academic year.
But, when are all the payments due for college? And, how do you deal with factors like 529 plan distributions and college payment plans? I reached out to several different experts in the field of higher education to come up with the details for this college payment timeline.
May-June: Enrollment Deposit Is Due
The first annual payment for higher education takes place in May (typically May 1st), and this payment comes in the form of an enrollment deposit. However, this year, schools have delayed it to June in some instances, due to the FAFSA delays.
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Paul Dieken, Ed.D., who serves as Director of Financial Aid at Pomona College in Claremont, California, says that this deposit secures or holds your place in the incoming class.
While this enrollment deposit is typically mandatory, you may have some wiggle room if you're paying late or struggling to come up with the money.
"Check with the admissions office of the college you are committing to in order to ask about waiving the deposit or getting an extension," says Dieken.
Outside of that, you should strive to abide by any deadlines the admissions office sets. If you're unsure what the deadline is or if it has passed, you should reach out to your school's financial aid office.
July: Finalize Student Loans
By July of each year, college students and their families should have compared student loan options and decided whether they want (or need) to borrow for school. Families should use federal student aid they can qualify for first since federal student loans come with fixed interest rates and qualify for protections like deferment and forbearance.
Federal loans are also eligible for income-driven repayment plans (e.g. the new Saving On a Valuable Education (SAVE) plan), which let students pay back amounts they borrow with low monthly payments (or potentially $0 payments) based on their income and family size.
Dieken also pointed out that it's not uncommon for students to have multiple types of loans in their financial aid package. As a result, you'll want to make sure that you understand the procedure for all of the loans you are borrowing.
If you find you're short on federal student aid to cover college tuition and fees and you don't have any savings to fill the gap, you can turn to private student loans.
While there is no specific deadline for student loans, you should plan on finalizing them in July since you'll want to have the money lined up before the first college payment is due in August.
August: First Payment Due
The first payment for a college academic year typically falls in August, although schools may have their own unique deadlines that are earlier or later. Quarter system schools may not have a deadline until September.
Dieken says most colleges will require you to settle your bill before you can start classes. Not paying your bill on time can also result in being dropped from your classes, so make sure to pay attention to deadlines that apply.
Remember that some payments, like students loans or some scholarships, may be sent directly to your school.
Most scholarships and grants also result in money being directly sent to your school and deducted from your account balance. However, you may want to request scholarship funds be sent directly to you in order to reduce the chances of scholarship displacement.
For the most part, the August due date and subsequent payment due dates are for cash you are bringing to the table and paying to the school directly. This includes money you're using from savings to pay for college, or even distributions you plan to take from a 529 college savings account.
January: Second Payment Due
The second payment for an academic year is usually due in January, and this payment covers remaining higher education expenses that apply until students are out for the summer. This payment may also be made on your behalf automatically if you're paying for college with student loans, scholarships, grants or a combination of these options.
If you are paying part of your higher education expenses with your own funds, the second half of the year's payment will be due at this time.
Considerations With 529 Plans
529 college savings plans can be helpful when it comes to paying for college since they let funds grow tax-free over time, and because families can take tax-free distributions to cover eligible higher education expenses. Some states even offer tax incentives for contributions to 529 college savings plans.
Bill Townsend, CEO of College Rover, says that you can begin withdrawing funds from these accounts as soon as you have higher education expenses to pay for. For example, you can wait until a few weeks before the August payment for college is due, initiate a withdrawal to cover your out-of-pocket expenses, receive the funds in your bank account, then forward the money onto your college or university.
"Many families will withdraw lump sums each semester to cover costs," said Townsend.
All this being said, you'll want to avoid taking more money than you need and triggering tax issues. Fortunately, most 529 savings plans let you take withdrawals in smaller amounts as needed with transfers taking place in a matter of days.
With a 529 plan from Fidelity, for example, money withdrawn can be in your account and ready to use within two to four business days after you initiate a withdrawal.
And remember, for tax purposes, the money you withdrawal from a 529 plan must be used in the same calendar year as the expense. This can prove challenging for the January payment.
What About College Payment Plans?
Some colleges and universities also offer payment plans that would take place of the payment timeline we outlined above. These payment plans typically require families to make five or six installments per semester, usually for a small enrollment fee.
Townsend says families should speak with the schools' financial aid office to inquire about payment plans, and to keep communication open in the event family circ*mstances change.
"Colleges need and want to keep students enrolled and typically will try and work with families that have issues," he said.
Dieken adds that there are very few downsides to college payment plans as long as you can make the monthly payments. The biggest downside is that some payment plans will charge a service fee or require tuition insurance, which could increase your overall costs by as much as 10%.
It's crucial to make sure you can afford the payments before you go this route since not keeping up could result in you being required to pay the full remaining balance immediately to remain in class.
If you're not entirely sure you can meet the payment requirements for a full school year, Dieken says you should be looking at borrowing the money with student loans instead.
