Address Past-Due Tuition With Student Loans: Steps and Solutions

Falling behind on tuition payments is a common challenge for many students, with colleges and universities nationwide managing millions of dollars in past-due accounts. A recent ECSI and Higher Ed Dive Studio survey revealed that the majority of higher education institutions report an increase in past-due tuition and fees.

Unpaid tuition can lead enrollment holds, denied access to transcripts, and account collections. But several options are available to help you manage and resolve past-due tuition balances. This guide explores steps you can take, including federal and private student loan options, to address overdue tuition and continue your educational journey without interruption.

Table of Contents

1. Steps to take if your tuition is past due
   1. Step 1: Talk to your school’s financial aid office
   2. Step 2: Claim federal student loans
   3. Step 3: Look into emergency student loan programs
   4. Step 4: Apply for private student loans
   5. Step 5: Consider alternatives

Steps to take if your tuition is past due

Here are the steps to take if you need a student loan for past-due tuition.

Step 1: Talk to your school’s financial aid office

Before taking out new loans, consult your college’s financial aid office. They can clarify your outstanding balance and discuss repayment options, such as payment plans or deferments. Depending on your situation and the school’s policies, this can be done in person, over the phone, or via email. Choose the method that best suits your needs and availability.

If you’re behind on school tuition or can’t make payments, contact your financial aid department as soon as possible to find a solution. In some cases, you may be able to negotiate a lower tuition amount and a payment plan. Before agreeing to the payment plan, ensure you fully understand the details and the consequences of missing payments. 

Step 2: Claim federal student loans

If you’ve completed the Free Application for Federal Student Aid (FAFSA), review your award letter on the StudentAid website.

Check for any unused federal student loans that can cover your past-due tuition, adhering to federal student loan limits.

Prioritize Direct Subsidized Loans, followed by Direct Unsubsidized Loans. Graduate students should consider federal PLUS Loans as a final option.

Below is an example of what you would see in your letter that shows the loans and amounts you were awarded.

Source

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Tip

Be sure you’re clear on FAFSA deadlines—generally June 30 of the academic year (e.g., for 2024 – 2025, the deadline is June 30, 2025.) State and college deadlines may be earlier.

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Submitting the FAFSA early increases your chances of receiving aid. Missing deadlines may limit your eligibility.

If you’re unable to secure federal aid for past-due tuition:

• Pause enrollment: Consider taking a break to address financial issues.
• Make payments: Work on settling your outstanding balance
• Re-enroll: Once resolved, re-enroll, ensuring compliance with your school’s specific deadlines.

Step 3: Look into emergency student loan programs

Many colleges offer emergency student aid programs to assist students facing financial hardships. These programs may include:

• Emergency loans: Short-term, often interest-free loans to cover immediate expenses.
• Grants: Funds that don’t require repayment, provided to students in need.
• Completion scholarships: Assistance to help students pay outstanding balances and complete their education.

Eligibility criteria, application processes, and available funds vary by institution. Contact your school’s financial aid office to learn about specific programs and determine your eligibility.

Organizations such as the United Negro College Fund (UNCF) offer emergency student aid programs to support students at risk of dropping out due to financial hardship.

Step 4: Apply for private student loans for past-due tuition

If federal or emergency loans aren’t viable, private student loans can help cover past-due tuition. These loans, from private lenders, are based on creditworthiness rather than financial need.

Considerations for private student loans:

• Eligibility: A good credit score is typically required. If your credit is limited or poor, a creditworthy cosigner may be necessary.
• School eligibility: Ensure your institution qualifies for private loans; some lenders have specific school criteria.
• Application timing: Unlike federal loans with strict deadlines, private student loans can be applied for at any time, making them a flexible option for addressing past-due balances.
• Lender policies on past-due balances: Some lenders allow loans to cover past-due tuition up to a certain time frame, often up to 12 months. For example, Earnest permits payment of past-due balances up to 365 days old.

Here are our highest-rated private student loans:

Steps to apply for a private student loan:

1. Assess your finances: See how much you need to borrow and check your credit score beforehand. If your score is low, you may need a cosigner.
2. Compare lenders: Many lenders offer private student loans. Compare rates, terms, and repayment options, and get the best offers.
3. Prepare documentation: Most lenders ask for information to help verify your identity. You may also need proof of enrollment, income, and information about your cosigner (if applicable).
4. Submit application: Complete the application accurately and thoroughly to streamline the approval process.
5. Await approval and disbursement: Upon approval, funds are typically disbursed to your school to cover the past-due balance.

Be sure to consider:

• Interest rates and terms: Private loans may have higher interest rates and less flexible repayment options than federal loans, especially if you or your cosigner have less-than-perfect credit. It’s crucial to understand the terms before committing.
• Repayment responsibility: Remember, you and your cosigner (if applicable) are both responsible for repayment. Failure to repay can affect both parties’ credit scores.

Before opting for a private student loan, exhaust all federal aid options, including grants and work-study programs. They often come with more favorable terms and protections.

Step 5: Consider alternatives if you aren’t eligible for federal and private student loans

If your school doesn’t qualify for federal, private, or emergency loans—common with for-profit or non-accredited schools—speak to your financial aid office to understand available options. Scholarships or grants might help cover your past-due tuition.

Other options include:

• Request a professional judgment review: Ask your school’s financial aid administrator to reassess your aid package, which might increase your assistance.
• Search for emergency aid: Organizations such as the United Negro College Fund or Scholarship America may offer grants or scholarships for students in financial need.
• Seek community support: Check with local nonprofits or community organizations for financial assistance programs.
• Use savings cautiously: Consider dipping into a savings or retirement account to settle your balance. Weigh the pros and cons carefully to avoid financial strain.
• Negotiate with your school: Some schools may allow you to negotiate tuition costs or set up a payment plan.
• Consider a personal loan. If other options are unavailable, a personal loan might help. Be mindful of potentially high fees and interest rates.

When it comes to taking out student loans for any reason, consider the total amount you will borrow for your education relative to the amount you expect to earn in your career. A good rule of thumb is not to borrow more than your expected annual salary.

If you’re behind on your tuition, don’t wait to take action. Failing to pay your tuition can have dire consequences, including:

• Your class registrations may be canceled.
• You may be ineligible to register for new classes.
• You may not be able to secure financial aid from your school in the future.
• Your balance could be sent to collections, leading to wage garnishment, litigation, and more. It could also harm your credit score.

Acting quickly can help you avoid consequences such as canceled class registrations, lost financial aid eligibility, or credit damage from collections. If federal and emergency loans aren’t viable, review our guide to top-rated private student loan lenders.