Two Questions - College Tuition Payments

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luckybamboo
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Two Questions - College Tuition Payments

Post by luckybamboo » Thu Jul 19, 2018 1:26 pm

I have two questions for experienced parents of college students
1. My DD's college offers an option to choose 'Guaranteed Fixed Tuition Plan' which guarantees the tuition rate for all the 4 years of her college. The rate during the first year is a little higher than the current rate but it won't go up until she graduates. Is it a good idea? (Something within me tells me not to do it but I don't know why)
2. Is there a reason I should pay the tuition in 4 installments instead of one lump sum if I have the money to do so? The charge for setting up the payment plan is $25 and amount due is $7500. I am leaning towards lump sum unless someone has a different suggestion that makes sense.
Thanks

Big Dog
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Re: Two Questions - College Tuition Payments

Post by Big Dog » Thu Jul 19, 2018 1:29 pm

1. how much is a "little higher"? What has been the college's recent history with tuition increases? (note, that this deal only covers tuition, so fees and housing and food will continue to increase.)

2. Lump sum each semester, I assume makes most sense if you have the cash.

luckybamboo
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Re: Two Questions - College Tuition Payments

Post by luckybamboo » Thu Jul 19, 2018 1:37 pm

Big Dog wrote:
Thu Jul 19, 2018 1:29 pm
1. how much is a "little higher"? What has been the college's recent history with tuition increases? (note, that this deal only covers tuition, so fees and housing and food will continue to increase.)
It is 3.5% higher than the variable rate tuition plan. This year's tuition is 4% higher than the last year's tuition.

Jack FFR1846
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Re: Two Questions - College Tuition Payments

Post by Jack FFR1846 » Thu Jul 19, 2018 1:40 pm

3.5%.....absolutely, I'd pay that to lock in tuition. No question. I'm paying about double what you are going to. Got my check ready for $30k for the upcoming semester.

Sounds like the payments are per quarter. Is there a charge to pay by the quarter? If there is, do the math.

Something else to look into is whether paying by credit card is allowed with no extra charge. The college that my son went to freshman year took credit cards with zero, none, nada nothing extra added. While this is unusual, if you don't ask, you don't get the rewards back for free and an extra month to pay that bill sitting in your high yield savings account.
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Rupert
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Re: Two Questions - College Tuition Payments

Post by Rupert » Thu Jul 19, 2018 1:57 pm

Big Dog wrote:
Thu Jul 19, 2018 1:29 pm
1. how much is a "little higher"? What has been the college's recent history with tuition increases? (note, that this deal only covers tuition, so fees and housing and food will continue to increase.)
You definitely want to look at the pattern of tuition increases going back ten years or more if possible. Does the tuition increase a little each year or remain flat for five years, etc., and then increase a lot all at once? Don't just look at the past couple of years because lack of a tuition increase over that period of time might mean that a huge tuition increase is almost guaranteed during your child's time there.

livesoft
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Re: Two Questions - College Tuition Payments

Post by livesoft » Thu Jul 19, 2018 2:14 pm

What if your student drops out or switches schools?

We always set up a payment plan when we could because we always made more money investing than wasting that money on paying college early.
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an_asker
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Re: Two Questions - College Tuition Payments

Post by an_asker » Thu Jul 19, 2018 2:35 pm

luckybamboo wrote:
Thu Jul 19, 2018 1:26 pm
[...]
2. Is there a reason I should pay the tuition in 4 installments instead of one lump sum if I have the money to do so? The charge for setting up the payment plan is $25 and amount due is $7500. I am leaning towards lump sum unless someone has a different suggestion that makes sense.
Thanks
One reason I can think of ... if you're the kind that milks his/her superior credit history by credit card laundering (or whatever the term is!) ;-)

I'd get a new credit card for each installment, and pocket the reward for the $1000-$4000 spend (whatever the credit card offers).

luckybamboo
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Re: Two Questions - College Tuition Payments

Post by luckybamboo » Thu Jul 19, 2018 5:35 pm

an_asker wrote:
Thu Jul 19, 2018 2:35 pm
luckybamboo wrote:
Thu Jul 19, 2018 1:26 pm
[...]
2. Is there a reason I should pay the tuition in 4 installments instead of one lump sum if I have the money to do so? The charge for setting up the payment plan is $25 and amount due is $7500. I am leaning towards lump sum unless someone has a different suggestion that makes sense.
Thanks
One reason I can think of ... if you're the kind that milks his/her superior credit history by credit card laundering (or whatever the term is!) ;-)

I'd get a new credit card for each installment, and pocket the reward for the $1000-$4000 spend (whatever the credit card offers).
Paying with credit card isn't an option.

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teen persuasion
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Re: Two Questions - College Tuition Payments

Post by teen persuasion » Thu Jul 19, 2018 6:39 pm

Any chance of a tuition roll back in the near future?

The college that my DH and I attended announced they were resetting tuition rates back to levels from a decade ago. They were also rejiggering financial aid levels to compensate, but if you are paying full freight....

billfromct
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Re: Two Questions - College Tuition Payments

Post by billfromct » Thu Jul 19, 2018 7:46 pm

Will you be able to take advantage of the American Opportunity & Lifetime Learning tax credit?

You get a 100% tax credit on 1st $2,000 qualified tuition payments and a 25% tax credit on the next $2,000 qualified tuition payment, for a total Federal tax credit of $2,500/year for each child.

You could get the tax credit for the 2018 tax year paying the Fall tuition payment. Then you could get the 2019 tax credit when you pay the Spring tuition bill in January 2019. I believe you can claim the tax credit on 4 years of tax returns for each child.

I always paid the $4,000 tuition payment with a separate check and the rest from my son's 529 plan. I used a separate personal check for the tuition payment as proof of payment if I ever got audited.

Your modified adjusted gross income (MAGI) must be under $160k/year if married filing jointly to qualify.

bill

blevine
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Re: Two Questions - College Tuition Payments

Post by blevine » Thu Jul 19, 2018 10:45 pm

livesoft wrote:
Thu Jul 19, 2018 2:14 pm
What if your student drops out or switches schools?
+1

Kids transfer, drop out or take a coop break and go back.
What if they change major or go on coop and miss a semester, will freeze cover senior year if it occurs in year 5 ?

I never buy extended warrantee, why this ?

luckybamboo
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Re: Two Questions - College Tuition Payments

Post by luckybamboo » Fri Jul 20, 2018 12:42 pm

billfromct wrote:
Thu Jul 19, 2018 7:46 pm
Will you be able to take advantage of the American Opportunity & Lifetime Learning tax credit?

You get a 100% tax credit on 1st $2,000 qualified tuition payments and a 25% tax credit on the next $2,000 qualified tuition payment, for a total Federal tax credit of $2,500/year for each child.

You could get the tax credit for the 2018 tax year paying the Fall tuition payment. Then you could get the 2019 tax credit when you pay the Spring tuition bill in January 2019. I believe you can claim the tax credit on 4 years of tax returns for each child.

I always paid the $4,000 tuition payment with a separate check and the rest from my son's 529 plan. I used a separate personal check for the tuition payment as proof of payment if I ever got audited.

Your modified adjusted gross income (MAGI) must be under $160k/year if married filing jointly to qualify.

bill
No, we will not be able to take the AO credit

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