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Mind on Money: Summer Means Tuition Fees | F. Marc Ruiz: Your opinion on money

As the deadline to complete the Federal Financial Aid Access Process (FAFSA) has passed (June 30), the granting and acceptance of loans and assistance offered will take place as and when that the tuition fee payments will be due. It is important to understand the difference between the types of loans. Subsidized loans do not bear interest while the student is enrolled. Unsubsidized loans bear interest, but do not require payment while the student is enrolled. Parent Plus loans are applied for as a separate online process, and some schools may require a different process as well. Parent Plus loans are expensive, charging a higher than market interest rate as well as origination fees.

I will reiterate my usual advice on student loans. I have come to view these financial products as perilous and these loans must be used with extreme caution and diligently managed. They are best avoided, and not accepting more funds than necessary to fill the tuition fee gaps is vital to long-term financial health.

Most, if not all, schools will also offer a payment option for tuition, accommodation, and board. So if the bill is intimidating, call the school and make a plan. Installment plans often come with a fee, but while the installment plan can help avoid taking out student loans, it can cost a lot less over time.

If the family has accumulated funds in a 529 college savings account, now is the time to play. For ease and convenience, I usually pay college expenses into my own bank account and then I ‘use 529 to reimburse me. This is considered a qualified withdrawal for tax purposes, and Company 529 will ask if the withdrawal is qualified when requested. The state of Indiana offers a very attractive state tax benefit for 529 contributions, so I continue to contribute monthly while my students are in school, doing the math to make sure the account will be empty when the last invoice will be due.

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