Save the Date! Your Fall Fee Payment Deadline is Approaching
Fee payment deadlines have a tricky way of sneaking up on you. Every semester, 529 plan service centers receive frantic calls from parents and students trying to expedite a withdrawal from their 529 account. Granted, while this last-minute rush is stressful, it’s still far better than not having any savings to draw from.
This situation is completely avoidable. While transferring funds from a 529 account to a student’s university account isn’t an instant process, the transfer can happen relatively quickly in most cases. To keep your semester on track, please heed this guidance when you need to take a withdrawal this fall!
Generally, there are four ways to request a withdrawal from a 529 plan, and they can usually be initiated online or by phone. (Note: Your plan may offer additional options. Also note: It is generally advisable for tax purposes to select the student as the payee.)
– Send a check to your address of record: The funds are mailed directly to you, and you pay the school.
– Transfer the funds to your bank account on file: Funds are sent electronically to your bank.
– Send a check to the school’s accounts payable address: The 529 plan mails a check directly to the school. Important: You’ll need to provide the 529 plan with the school’s name and address, the student’s name and student’s ID.
– Electronic transfer (ACH) to the school: Funds are sent directly to the school electronically. Again, ensure the name of the school and the student ID are attached to this request.
As a rule of thumb, request your withdrawal at least 10 business days before the fee payment deadline. However, you should add extra time to your buffer if:
– A check is being mailed to you or the school.
– You are linking a new bank account to your 529 plan (in some cases, safety holds can prevent withdrawals for up to 15 days after linking).
Pro Tip: Consider sending funds directly to the school via electronic options like ACH or other services offered by your plan. While some plans charge a small fee for faster electronic service or overnight express check shipping, it may be worth it to avoid late charges.
What Happens if You Miss the Deadline?
The consequences of missing a fee payment deadline can range from costly late fees to being dropped from your classes for non-payment. Trust me, there is nothing fun about paying extra penalties or losing your seat in a required course!
If you realize you won’t make the deadline:
1. Contact the school immediately: Call the business office or accounts payable department and ask if they offer a temporary deferred payment plan.
2. Use a backup payment method: Pay the amount out of pocket from a personal bank account or credit card to bridge the gap (just be aware that universities often charge a convenience fee for credit cards), then reimburse yourself from the 529 later.
The takeaway: Save the date, schedule your withdrawal at least 10 business days in advance, and follow up with the university to confirm the funds were successfully applied to the account.
Pay your fees on time so your student can get down to the real business of being a student!
About the author:
Lael M. Oldmixon, M.Ed., is the Executive Director of the Education Trust of Alaska, which offers Alaska’s three 529 plans, Alaska 529, the T. Rowe Price College Savings Plan, and the John Hancock Freedom 529 Plan. She lives in Alaska with her spouse, two children, and two dogs.