How to manage and pay off past-due tuition

If you have past-due tuition, you're not alone. According to a survey by ECSI and Higher Ed Dive, 52% of higher education officers stated there were more delinquencies in 2023 than previous years. In fact, 39% of institutions manage past-due tuition accounts of more than $1 million dollars, while 33% manage more than $5 million in past-due accounts. Though managing tuition payments can be challenging, the consequences of unpaid tuition can affect your enrollment at school and your credit.

What is past-due tuition?

Past-due tuition refers to outstanding payments owed to your school. When you go to college, you're required to make tuition payments by the due date. Once you miss that date, you enter past-due status. Some possible reasons for missing the deadline include:

• Experiencing financial hardship
• Lack of financial support from family
• Changes in eligibility for financial aid

Whatever the reason is, your college education comes with a cost. When you miss the due date, your school may react in several ways, and you may face the consequences of unpaid tuition.

What are the consequences of unpaid tuition?

The consequences of unpaid tuition can vary by school. Each school may have its own timeline and protocols for how to handle late tuition payments. But the ramifications can put a halt on your progress and could cost you in more ways than one.

1. You may be unable to register for classes: When you have overdue tuition payments, the bursar's office at your college can flag your account and block enrollment for future classes.
2. You may have to pay late fees: If you have past-due tuition, you may be hit with a late fee, depending on your school's policy. For example, the City University of New York's Graduate School of Public Health & Health Policy tacks on a $15 late fee for past-due balances.
3. Your outstanding balance may go to collections: After a while, your college may send your past-due tuition balance to a collection agency. Getting your account current with collections may involve fees and extra work, and by this point, the debt can damage your credit.
4. You may not be able to access transcripts: If you're planning to apply for graduate school or certain programs like the Peace Corps, you need to provide your college transcripts. If you have overdue tuition payments, your school might not allow you to get your transcripts. However, some states - like California and New York - have prohibited this practice. Additionally, on July 1, 2024, the Department of Education banned colleges from withholding transcripts for credits funded by federal student aid.
5. You may not get your diploma: Your college education can be integral to your career and future success. But if there's an outstanding balance on your account, your school may not give you your diploma.
6. You may lose your visa status: International students who rely on a visa to study in the United States may jeopardize their visa status with past-due tuition.

How can financial aid help with past-due tuition?

If you're currently dealing with past-due tuition, your best bet is to reach out to your school's financial aid office. Many schools have tuition debt relief options like emergency funding or emergency grant programs to help students with unexpected financial hardship.

Ask about eligibility requirements, and be aware that some emergency programs may let you use funds toward tuition, while others might not. Provide any necessary documentation to illustrate your financial hardship and discuss your options.

FAFSA and past-due tuition

Getting federal financial aid by submitting the Free Application for Federal Student Aid (FAFSA) can give you options to pay for college. Your award package may come with a mix of federal student loans, like subsidized and unsubsidized loans with various repayment options, as well as scholarships, grants, and work-study. This funding can help you stay current with your tuition obligations.

Generally, Federal Student Aid (FSA) funds can only be used for the period they are allocated for. But according to the FSA Handbook, schools may use up to $200 for prior-year tuition and fees. That's not much, but it can help. You should submit the FAFSA each year so you don't fall further behind, and to see if you qualify for other scholarships and grants that can help in your situation.

If your overdue tuition payments exceed $200 and federal student aid isn't possible, you can look into private loans, which have more flexibility.

Private student loans

FAFSA runs on deadlines. The problem is that your school, state, and federal government may have different deadlines. If you miss them, you might be out of luck when it comes to financial aid.

That's where private student loans can help. You can get private student loans through a credit union, bank, or online lender. The best part is that you can apply for a private student loan whenever you need.

Some private lenders do allow funds to be used for past-due tuition, but it's crucial to check before you apply. If the lender allows it, check the eligibility requirements beforehand.

For example, private lenders College Ave, Sallie Mae, and Earnest allow you to use your funds toward your outstanding balance if it's no more than 365 days past due. This can be a major help if you need assistance to pay off your past-due tuition. However, unlike federal loans, private lenders review your credit as part of the application.

If you have very little credit history or a low credit score, you'll need a cosigner. Cosigners typically must have excellent credit and meet the eligibility requirements set by the lender. Additionally, a cosigner is equally responsible for the loan, so they'll be on the hook if you don't make your payments.

Organizational support

Look into community resources and organizations that provide emergency grants for students. Some options include:

• Scholarship America: The organization distributed $3.1 million in emergency grants last year. According to their data, 95% of recipients continue with the term they're in. 
• UNCF: This organization offers emergency student aid in several forms, including a degree completion aid grant of up to $2,500 for eligible students who will graduate soon. 
• Institute of International Education: The IIE Emergency Student Fund supports international students when wars, natural disasters, or other crises may hinder their education. The grants cover basic needs. While you may not be able to use these funds toward past-due tuition, getting other expenses covered may free up extra funds to pay your balance. 

What tuition payment plans are available for past-due tuition?

Covering tuition can be tough because it's a significant amount of money to pay up front. Many colleges know that it's a large sum of money that can be hard to pay, and offer tuition payment plans for a fee.

Be aware that colleges typically only offer tuition payment plans if you're in good standing and haven't missed any payments. You may need to pay off your past-due tuition first to be eligible for a tuition payment plan. Contact your school's financial aid office to see if you can use a tuition payment plan for past-due tuition or if there are any other solutions to consider.

How can you negotiate past-due tuition?

Negotiating tuition debt can be tough, but it doesn't hurt to try. It helps to:

• Make a case: Get any documentation that can support you when negotiating tuition debt.
• Talk to the right person: Go to the admissions or financial aid office and talk to the right person to see if you can negotiate your balance.
• Ask: Be direct and ask for what you want. What terms would work well for you?

While schools may be hesitant to work with you, it's a good idea to try so you know your options. If you're going to a private nonprofit school, these institutions are more likely to offer tuition discounts, according to the National Association of College and University Business Officers.

Additionally, if you have submitted your FAFSA but your financial situation has changed, you can ask for a professional judgment. This means a financial aid administrator can review your case and update financial information on your FAFSA to better reflect your current circumstances.

How does past-due tuition affect your credit score?

If you have past-due tuition, it won't harm your credit score right away. But if your tuition goes unpaid for a while, your account could be sent to collections. At that point, the past-due tuition can negatively affect your credit score since the collections can appear on your credit report.

Past-due tuition FAQ

What happens if I can't pay my tuition on time?

If you don't pay your tuition on time, you may not be able to register for future classes, and may face late fees. Your school may eventually send the unpaid debt to collections, which could damage your credit and lead to legal and financial challenges.

Can you negotiate past-due tuition?

Negotiating tuition debt may or may not be possible, depending on your school and your circumstances. Contact your admissions or financial aid office to start the negotiation process and see what your options are.

How do I get financial aid for past-due tuition?

To use financial aid for past-due tuition, reach out to your school's financial aid office first. There might be emergency grants or funding available. If you submitted the FAFSA and received federal funds, your school may also be able to use $200 in funds toward a previous year.

Does past-due tuition affect credit?

Past-due tuition will affect your credit if it remains unpaid for a long time and gets sent to collections. Once the debt is sent to a collection agency, it can show up on your credit report. The information in your report impacts your credit score, which may drop due to the unpaid debt.

What are the legal consequences of unpaid tuition?

Your school may threaten you with legal action if you have unpaid tuition. Starting the litigation process can result in attorney fees, and your debt could go to collections and hurt your credit score.