My understanding is that electronic transfers are free. If we can do that free on a monthly basis, that would be nice. Otherwise, we could save that $100. Which is hilarious, given how much tuition will be.
One thing to consider if you have a 529 is the timing of the payments and withdrawals around year end. You can get tangled up with the IRS if your withdrawals don’t match the timing on the billing.
You may want to look at your info again. At my kids’ schools the transfers are free but paying on a payment plan regardless of the method, is not (though granted it’s a little fee). I’m guessing the same is true for you.
Some folks that I know pay tuition in a lump sum from a home equity line of credit, and then make monthly payments back to the credit line instead of the school. Whether or not that makes sense depends upon how much extra fee is charged for the 10 month installment plan and if there would be any tax benefit or not. YMMV.
@RightCoaster , please tag me when you do:-)
I figured paying tuition with a credit card is like paying taxes with one. So I googled “paying taxes with credit card” and several sites came up that tell you when it’s advantageous. For example this one:
http://thepointsguy.com/2015/04/top-13-rewards-credit-cards-to-pay-your-taxes-with/
I’m not going to bother with the homework because neither school my kids are at accept credit card, but for someone else who has the option this might be helpful for making it worth paying the fees.
The college isn’t going to just take monthly transfers from your account to theirs. If you want to do a monthly payment plan, you must do so through one of their services. This requires signing a contract, and agreeing on the specified amount. The monthly payment company then deals with sending the money to the college.
You can’t just do this yourselves.
If you want to pay yourself, it needs to be when billed…usually prior to each term beginning.
@thumper1 - I’m not following what you are responding to (sounds like you are correcting someone).
My experience:
I get an email that says a statement is ready. I go on the portal and transfer money from my bank account. No middle man or “monthly payment company”. The only “contract” I sign is with the school stating whether I am going to pay for the semester or the month so they know how much and when to bill me.
I think it depends on the college. My kids’
colleges did it differently – one required signing up for a plan & paying a third party, but the other one (same college as Claremontmom’s kid) just bills you monthly if you want to do it that way.
Thanks @intparent ! That makes sense. I guess thumper didn’t realize some schools don’t use a third party, while I didn’t know that some schools did!
Got it! You are right…I had no idea some schools did these monthly payments in house. Ours didn’t!
Best bet…check your college to see what they allow!