Tuition discount, 2% pre-pay, 1% two payment

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bnes
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Tuition discount, 2% pre-pay, 1% two payment

Post by bnes » Mon Mar 12, 2018 12:54 am

I'm staring at at a private elementary school tuition form. I can pay 10 equal payments, or get a 2% discount for a single lump sump, or a 1% discount for two payments. Tuition is non-refundable and due even if the kid withdraws (though they'd have trouble collecting it in the case of the staged payments).

I have sufficient cash to make a lump sum payment, and no immediate plans to re-balance that cash into investments. At the end of the year I will take out $10k from a 529 plan to offset the tuition cost, under the new USA tax plan law. The school is new, but I have every expectation it will continue for the first term at least.

When is a 2% discount worth it?

Goal33
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Re: Tuition discount, 2% pre-pay, 1% two payment

Post by Goal33 » Mon Mar 12, 2018 1:06 am

I prepay to save on car insurance.

In this case I’d want to pay monthly to maintain my easy recourse. Same would go for repaying rent - I wouldn’t do it (unless there was already an established trusting relationship).
A man with one watch always knows what time it is; a man with two watches is never sure.

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PharmVest
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Re: Tuition discount, 2% pre-pay, 1% two payment

Post by PharmVest » Mon Mar 12, 2018 8:29 pm

I always feel these questions get easier if you figure out how much money you are really saving.

Assuming your tuition is $10,000 and you'll get 2% off. That's $200.

Is $200 worth having the ability to change your mind and withdraw? Is the psychological benefit of keeping more cash around and not fully commit worth $200?

I might be willing to pay $200 for "this school sucks" insurance since its new. hahah :sharebeer

Jason

edit- typos.. always with the typos...

PhilosophyAndrew
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Re: Tuition discount, 2% pre-pay, 1% two payment

Post by PhilosophyAndrew » Mon Mar 12, 2018 9:02 pm

OP states that full tuition is due even if the family withdraws from the school (which makes sense: staff hired to support a specifc enrollment need to be paid for the year no matter what) and speculates that it might be safe not to honor that debt after withdrawal. This is hardly tantamount to an “insurance policy” for tuition refund.

Many private schools offer insurance policies that refund unused tuition. However, if OP’s family’s new school offers this, It would be an additional charge.

OP if you are committed to the school for one year, I would prepay tuition and save the 2%. If, however, you can’t commit to abide by the terms of the enrollment contract I would walk away — it would be unethical (and perhaps illegal) to withdraw mid year and refuse to honor a tuition agreement you signed.
Last edited by PhilosophyAndrew on Mon Mar 12, 2018 10:00 pm, edited 1 time in total.

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PharmVest
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Re: Tuition discount, 2% pre-pay, 1% two payment

Post by PharmVest » Mon Mar 12, 2018 9:22 pm

Ah, I missed the part about the tuition being committed either way. The value proposition question for keeping cash around still stands, however =)

bnes
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Re: Tuition discount, 2% pre-pay, 1% two payment

Post by bnes » Tue Mar 13, 2018 12:15 am

Private schools can and HAVE gone bankrupt in our area. This one I know has a $250k backstop, covering any first year losses.
My basic feeling is the 2% discount is not rich enough to interest me.

Nate79
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Re: Tuition discount, 2% pre-pay, 1% two payment

Post by Nate79 » Tue Mar 13, 2018 9:40 am

Considering you can get 1.5% in a savings account easily the savings is minimal. I would much rather keep the cash in hand for emergencies or in the case as was mentioned something happened to the school.

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midareff
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Re: Tuition discount, 2% pre-pay, 1% two payment

Post by midareff » Tue Mar 13, 2018 9:41 am

Can you get the 2% by prepay and another 2% for putting it on a cash back credit card?

JBTX
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Re: Tuition discount, 2% pre-pay, 1% two payment

Post by JBTX » Tue Mar 13, 2018 11:12 am

I prepaid for a preschool then my daughter got kicked out and I only got part of the remainder back.

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