Should I take this payment plan?

[disneysteve]

Our final tuition payment is due this month. The bill is $15,500. We do not currently have that much readily accessible. My plan was to pay about $8,500 from savings and borrow the other $7,000 from our HELOC. That's actually part of the reason we got the HELOC to begin with.

However, the school offers interest-free financing with the bill spread over 5 monthly payments. There is a one-time $45 plan enrollment fee which is 0.29% of the balance so pretty nominal. Doing that would save us the interest we would incur borrowing from the HELOC.

I'm sure we can cash flow the 5 payments and even if we end up short at any point, we can still tap the HELOC then but we definitely wouldn't need to borrow the full $7,000 so we'd still come out ahead.

Is there anything I'm not thinking of that would make the payment plan a bad idea? It sounds like a cheaper option than borrowing the 7K.

ETA: The HELOC is at 3.99%.

[creditcardfree]

I think you thoughts are correct. Payment plan sounds like a good way to go from a cash flow standpoint and will save some interest over the HELOC.

[Bluebird]

Congratulations on your final tuition payment! How exciting! The payment plan is less expensive than what the interest on the HELOC would be, so I would do the payment plan.

[Gailete]

Sounds like a good plan and it would mean that her school is all paid for when she graduates. I think from earlier posts you have been handling the finances without student loans, etc. But I may be forgetting something. You sound disciplined enough and you know your finances well enough to be paying out $1409 a month. If you can do it without squeezing yourself to tight that you don't have to eat oatmeal for months, then go for it. Congratulations by the way. This is a big feat that you have accomplished.

[disneysteve]

Congratulations on your final tuition payment! How exciting!

Thanks. It will be nice to be done.

Sounds like a good plan and it would mean that her school is all paid for when she graduates. I think from earlier posts you have been handling the finances without student loans, etc. But I may be forgetting something. You sound disciplined enough and you know your finances well enough to be paying out $1409 a month.

We took one Parent PLUS loan in August 2016 that we've already repaid.

She took a Stafford loan in August 2016 that she's already repaid and she took another this August that she's working on now. It was for $7,500 and she is paying back $400/month so it will be gone fairly quickly. She'll owe about $4,700 total when she graduates and DW and I will owe nothing. She'll be student loan debt free within a year of graduation.

This plan wouldn't be $1,409/month. It's $15,500 paid in 5 installments, so $3,100/month for 5 months. We already have the money set aside for the first 2 of those payments and most of the third. That gives us time to accumulate the rest which shouldn't be a problem at all.

[Gailete]

Thanks. It will be nice to be done.


We took one Parent PLUS loan in August 2016 that we've already repaid.

She took a Stafford loan in August 2016 that she's already repaid and she took another this August that she's working on now. It was for $7,500 and she is paying back $400/month so it will be gone fairly quickly. She'll owe about $4,700 total when she graduates and DW and I will owe nothing. She'll be student loan debt free within a year of graduation.

This plan wouldn't be $1,409/month. It's $15,500 paid in 5 installments, so $3,100/month for 5 months. We already have the money set aside for the first 2 of those payments and most of the third. That gives us time to accumulate the rest which shouldn't be a problem at all.

Oh, I misunderstood that the whole amount would be on that loan, I was thinking it wold just be $7000, but even better is you already have two of the payments ready to go and so you have more time to think up some way to make the next three less difficult to pay.

[disneysteve]

Oh, I misunderstood that the whole amount would be on that loan, I was thinking it wold just be $7000, but even better is you already have two of the payments ready to go and so you have more time to think up some way to make the next three less difficult to pay.

Ah. I wondered where the $1,409 came from.

We could just finance the $7,000 but since the plan is interest-free, that wouldn't make sense. The $8,500 we've got is sitting in an online savings account. It's only making about 1% but that's better than nothing. I'd rather leave it sitting there as long as I can.

ETA: Paying the others won't be a problem. I went full time at my job at the beginning of November and my income jumped as a result. We just had a little catching up to do for the time when my income was down prior to that.

[bjl584]

I'd take the school's offer as opposed to tapping the HELOC.

[disneysteve]

I enrolled in the payment plan today and initiated a transfer from our online savings to our checking account to make the first payment which is due on 12/15. I'll send that in as soon as the money hits our account.

[disneysteve]

I discovered another possible benefit to the payment plan. If the tuition tax credit survives the GOP, we will be able to get it next year. We've already maxed out the credit for 2017 so paying more doesn't help us. It's better to pay the rest in 2018 just in case there is still a credit available.

[Thrif-t]

I discovered another possible benefit to the payment plan. If the tuition tax credit survives the GOP, we will be able to get it next year. We've already maxed out the credit for 2017 so paying more doesn't help us. It's better to pay the rest in 2018 just in case there is still a credit available.

The tax credits did survive

http://time.com/money/5067240/gop-tax-plan-colleges-students-loans/