“How Unpaid Tuition Affects Your Credit and What to Do About It”

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What Happens if You Don’t Pay Your College Tuition?

Unpaid tuition can have significant consequences. Initially, colleges may impose late fees and place your student account on financial hold. This can escalate to:

• Registration hold: You won’t be able to register for classes until your bill is settled.
• Transcript hold: Your transcript won’t be sent to potential transfer schools, graduate programs, employers, or scholarship sources.
• Graduation hold: You may be unable to complete your degree or receive your diploma.
• Current classes: Extended unpaid tuition may result in being dropped from your current classes.
• Campus housing: You may lose access to student housing and dining halls.
• Collection expenses: If sent to collections, additional expenses may be added to your balance.
• Automatic payment plan: Some schools may automatically enroll you in a tuition payment plan.

Some states, including New York, California, Maine, Minnesota, and Washington, have protections to prevent colleges from withholding transcripts or diplomas due to unpaid tuition. Check with your state’s attorney general’s office if you believe your transcript or degree is being withheld illegally.

What Is a Tuition Payment Plan?

A tuition payment plan allows you to pay your tuition in monthly installments, making payments more manageable. The Consumer Financial Protection Bureau (CFPB) reviewed tuition payment plans at 450 colleges and universities and found:

• Enrollment fees can be as high as $200.
• Enrollment may be automatic or easy to overlook.
• Late fees and penalty interest may apply.

While a tuition payment plan can help manage large balances, it doesn’t reduce the total amount owed and may include fees or terms that increase your debt. If you can’t afford your tuition, a payment plan may not be sufficient.

Can Unpaid Tuition Hurt Your Credit?

Unpaid tuition can hurt your credit if your account goes into collections. A collection account stays on your credit report for seven years from the date of the original delinquency, lowering your credit score. If unresolved, your school may take legal action, requiring you to hire a lawyer or risk a default judgment. While a civil judgment won’t appear on your credit report, you may be responsible for associated fees.

How to Pay Off Late Tuition

If you foresee a problem paying tuition, meet with the financial aid office as soon as possible. They can explain payment arrangements, clarify deadlines, and point you toward emergency aid, late-deadline scholarships, or campus jobs. Here are a few ideas to raise money:

• Check into a payment plan.
• Find a job.
• Ask family or friends for help.
• Seek out scholarships.
• Accept federal student loans.
• Consider a private student loan.

How to Deal With Unpaid Tuition Sent to Collections

If your account has gone to collections, consider these tips:

• Don’t ignore the collector. Call back at a convenient time.
• Find out what you owe. Request an itemized bill.
• Don’t feel pressured. Take time to consider your options.
• Don’t accept abuse. Collection agents must not threaten or abuse you.
• Get help if needed. A nonprofit credit counseling agency can assist with repayment plans.

The Bottom Line

If you’re dealing with unpaid tuition, consider setting up free credit monitoring to keep track of your credit report and score. This can help you stay informed about any activity in your credit file, including tuition bills in collections or legal action. For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you with all your mortgage needs.

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