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Understanding Your Client’s Borrowing Timeline

When it comes to discussing college funding, financial planning clients tend to focus on the total cost of the school their child will be attending. While this number is critical, it’s equally important for you to make your clients aware of the ongoing borrowing timelines that will impact how much they’ll pay for college, and how much aid they’ll receive.

When Are Bills Due?

Fall semester bills are usually issued July 1st, due near August 1st. Spring semester bills are usually issued mid-November, due by mid-December. Our goal as advisors is to help our client have a funding plan in place (and have cash flow available) to cover these bills.

Typically, we advise that advisors help their clients to have loans in place for the first semester of college no later than July 1st. That helps them to ensure they won’t be dipping into their own pocket if they can’t cover expenses. Most borrowers are able to process a completed application and issue a disbursement in 1-3 days.

FAFSA Timelines

One of the key components to getting your clients’ financial aid squared away is completing and submitting the FAFSA. When their child is first heading into college, prioritizing the FAFSA application is often on their to-do list already. The FAFSA opens on October 1st, and closes at the end of June each year. However, for families preparing their high school senior, it’s critical to get the FAFSA submitted as soon as possible to find out what type of aid they qualify for. Additionally, state aid deadlines may be closer to the October 1st date.

Tracking Merit-Based Aid Deadlines

Many students apply for merit-based aid in addition to their more traditional FAFSA application. However, tracking the deadlines for the wide range of scholarships and grants they’re applying for can be challenging. Using the College Aid Pro tool, you’re able to track scholarship details including deadlines and project the expected need and merit-based amounts for each of your client’s college-bound children.

Merit-based deadlines aren’t always as structured as federal aid deadlines are. This makes it especially important to keep a running list of different scholarship deadlines, and what your college-bound family needs to submit in order to apply. Some of the top scholarships require that you have your application for admission in by as early as October 15th to be considered. In addition, some of the top scholarships offered by an institution are by invitation only and may have additional requirements.

How Do Payment Plans Work?

Monthly payment plans often start on or near June 1st for the following school year. There are many tuition payment plans available that split your semester bills into equal monthly payments. These can vary based on the school but are typically spread out over 4 or 5 months for the semester. These programs are often interest-free but may have some fees attached to them so be sure to check with the institution. This option can often be useful for families who have enough cash flow to cover a large percentage of their tuition bill but won’t have the full amount upfront at the beginning of each semester. This can help your clients avoid taking out a loan or putting a tuition bill on a credit card.

In a perfect world, your clients wouldn’t need to borrow student loans at all. However, that rarely happens, and we need to help our clients strategize how and when to borrow to minimize the cost of college. If you want help guiding your clients through the college funding process, sign up for a demo call with our CAP team today.

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