Payment schedule/plan for private school

[Anonymous]

Anonymous wrote:We do monthly and are “wealthy”.

+ 1

There’s no finance charge for monthly and we make money in interest by keeping the tuition money in our account for longer.

[Anonymous]

We do a 3-payment plan because it removes the hassle of paying monthly and works better for us. Every year I think about paying in full, but ultimately I can't guarantee that one of us won't lose a job, or that we would have to unenroll for some category of issues. So the real benefit of not paying in full is to get the tuition insurance in case something happens mid-year.

[Anonymous]

I pay all upfront because I hate doing multiple payments

[Anonymous]

We did two payments. It ended up being slightly less overall and you pay less fees. We pay it out of savings/investments then don't have to worry about it as part of our monthly cash flow.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Most people at the two private schools I’ve been to do monthly payments, even the ones who are wealthy. We used to pay by the semester until COVID but since then we do monthly and have tuition insurance. This allows me to bail if we need to without the school already having my money in advance. I will not ever pay tuition for long term virtual learning. I learned the hard way.

How do you know? I don’t even know the payment plan of even one other family at DC’s schools. At most, I could see having that discussion with one or two families we are particularly close to, but in our case, finances are never a topic of discussion. How can you speak for most families at multiple schools?

I was on the Board at both schools and this was discussed by our Chair of Finance. They didn’t give names - just percentages, which hovered around 85sh percent at both schools.

Interesting! I’d have assumed 2 installments was most popular. Did either school have incentives or penalties for any payment plans?

There was an incentive to pay one lump annual tuition fee and also by semester but we enrolled after COVID so I think people were just a little cautious.

[Anonymous]

Anonymous wrote:We do the monthly plan. The school doesnt offer any price difference with paying upfront.
Agree about PP comment about covid. We paid preschool upfront, got no money back and most of the other families paid by month and they just stopped paying.

Yep - this was us too. All I got for my $26,000 was virtual schooling for my 18 month old. 😳Never again. They will have to pry a full annual or semester tuition payment out of my cold dead hands.

[Anonymous]

I think people’s covid experiences definitely play a part. DC was in 6th (which was MS for our k-8 at the time), which if it was going to happen, was a good time — old enough for online school to be reasonably effective, but not so negatively impactful as it would have been for, say, HS science labs or AP classes. The school pivoted extremely well and was back in person (with lots of safeguards) in fall 2020. So we had no issue with continuing to pay tuition and it hasn’t influenced our decisions on how to pay since then (two installments).

For folks with young children where “online school” was just not ever going to be a functional alternative, being stuck paying tuition would definitely have been a very negative experience.

[Anonymous]

Anonymous wrote:DD just accepted and we are wondering about the payment schedule - pay once (May) in full, pay in 2 installments (May + Jan) or 10 monthly installments (May-Feb). We are not super wealthy. What schedule would you choose or what do most people do?

I would do the 10 monthly assuming it is interest free and not a charge to do that...I mean, assuming you are paying $60,000, then you are earning say $54,000 * 4% interest for an average of 5 months = $900...so why not?

Also, for many of the WCAC schools, if you decide to leave the school early, you aren't committed to paying the additional months. So, if you leave the school after paying 5 months, then you save the other 5 months, while if you pay 100% up-front they don't refund you. At least this is how SJC worked (kid graduated).

[Anonymous]

OP - so glad I asked!! Inspired to do monthly. THANKS all.

[Anonymous]

Our school has both an extra school admin fee AND a financing fee for monthly payments. Just be sure to check the fine print.

[Anonymous]

Anonymous wrote:We do a 3-payment plan because it removes the hassle of paying monthly and works better for us. Every year I think about paying in full, but ultimately I can't guarantee that one of us won't lose a job, or that we would have to unenroll for some category of issues. So the real benefit of not paying in full is to get the tuition insurance in case something happens mid-year.

This and the schools WILL not give you your money back.

[Anonymous]

Since there is no penalty or higher fee to pay monthly we pay monthly. I would rather invest my money or have it in a HYSA collecting interest than paying huge lumps at once or twice.

[Anonymous]

We did 2 installments the last three years. The first year, we were in a new job situation we were unsure of and did monthly which made the additional insurance mandatory (I think ours was an additional $900/annually).

Do read the insurance fine print, though. I think we switched to the 2 installments because our fine print said something like after January, you're on the hook regardless or something along those lines. I'm not sure what the exact wording was, but it was clear it wasn't really insurance after a certain point.

[Anonymous]

Just compare the following :
A- interest rate earned on full tuition if you were to put that whole amount in a CD or savings account. Example : $50K @4% is around $2000
B- the discount you get if you pay in full minus the tuition insurance.

If A>B, pay monthly installments

[Anonymous]

Anonymous wrote:Just compare the following :
A- interest rate earned on full tuition if you were to put that whole amount in a CD or savings account. Example : $50K @4% is around $2000
B- the discount you get if you pay in full minus the tuition insurance.

If A>B, pay monthly installments

I’ll add that you’re not earning interest on $50K for a year, you’re earning it on $50k declining to $0 over 10 months so it’s only 5 months of interest or 10 months at an average balance of ~$25K. And then you pay income tax on that so lop off another 30-40%.

For us the 1% discount was worth more than the interest