When the tuition bill comes due, your college will offer your student a few options. If there’s a balance after loans, grants, and scholarships, you may be tempted to pay with a credit card.
Here’s what parents in our Paying for College 101 Facebook group had to say about using “plastic” to foot the bill.
Find out if the College Has Credit Card Processing Fees
Parents were quick to point out that many schools pass along the cost of any fees they pay to accept credit cards. This fee varies, depending on the card processing technology they use, but typically ranges from 2-5% of the total amount charged to your card. Other schools may charge a flat fee for the privilege of using a card.
Credit card fee information can usually be located on the website, under student accounts and financial services. If it’s not prominently displayed, however, it doesn’t mean the college won’t charge a credit card processing fee.
“My daughter’s school charges $100 a semester to use the credit card, but I use my Delta SkyMiles card and haven’t paid for a flight in three years, and I travel a decent amount,” said Chari H.
Esmeralda T. shared her story. “I was ready to click submit payment, and I saw the credit card fee they slammed on top, a little over $500 just for paying with a credit card. No, thank you! I paid with my checking account instead. Read the fine print.”
Get Creative with Credit Card Rewards
If the school doesn’t charge a credit card fee, you may be in luck. Parents have come up with many ways to make credit card reward points, cashback offers, and new card promotional perks add up to big savings.
Parent Sabrina Malone said, “My oldest son’s college accepted credit cards, and they didn’t charge an extra fee either. We accumulated rewards points on a 0% interest card, then converted the points to Barnes & Noble gift cards. He used those to pay for three semesters of books! And we used them to buy Christmas gifts. It was definitely cool to have “free” textbooks and Christmas gifts.”
Kathleen P. said, “I ‘park’ the money on my Caesars Rewards card and then pay it off a week later. Then, I get free rooms in Atlantic City.”
“We did that with my daughter’s school,” said Valerie V. “For $40 only, they broke up a semester’s bill into four payments, and we paid it off each month. This gave us free airfare and paid for a good chunk of our Disney vacation we just took last month. Make sure you find out all the details, but if you can cash flow the payments, I would say go for it!”
Ask Yourself: Is It Worth the Cost?
Even if your school charges a fee, it may still be worth it to go the credit card route.
Kristy M. said, “The key to using a credit card is to pay it off every month. So really, you are just filtering dollars through. You’d have to see if the school’s service charge is worth what you’d get in credit card points.”
In some cases, the fee may be negotiable with the card company.
“My son is at Texas Tech, and they charge a 2.65% processing fee for using a credit card to pay tuition. His fall semester of freshman year, we were able to sweet talk our Amex Platinum into crediting us back the fee, but it didn’t work in the spring,” said Erum A.
Audra G. said, “I have done it. The under 3% fee is less than the cost of a flight, and the points you can earn are worth it depending on the card. I use the JetBlue card…If I pay a $100 fee but then can get a free flight home on a holiday, it’s worth it to me! I use the card for the school’s payment plan. Only charge what you can afford to pay in full you definitely don’t want to pay interest too. This is a cash flow option.”
Another parent uses the promo offer and convenience checks to get around the school’s 4% credit card processing fee. “I have a credit card with 0% interest for 12 months, so I will write a convenience check to myself and then pay the school. Yeah, no points there, but also no interest and no service fee!”
Other parents feel there are better ways to earn credit card rewards.
Stacey L said, “Most points are worth about $.01, so if you pay $15k on a card and get 15k points, it is worth $150 in travel (and flights are way more expensive.) A 2.85% fee would cost $427. You can earn most sign-on bonuses by just charging normal expenses and paying those off monthly, and flights are usually worth more points. So, if your kid is flying, definitely get a good travel card.”
The Bottom Line on Paying for College with Credit Cards
As with most college decisions, there’s no one-size-fits-all answer for whether you should use a credit card to pay for school. Since credit cards are debt and can come with a very high interest rate, this option may only make sense if you can:
- Avoid a processing fee by the college
- Pay no interest
- Get valuable perks, cashback offers, or airline miles, and
- Can pay the card off, in full, right away
Those using the credit card to cash flow college costs will get the most benefit. If there’s a chance you can’t pay the full cost of the credit card bill each month, you may end up paying expensive interest and fees. With many private loans at lower rates than credit cards, putting your college bill on plastic may not be the best option.
Use College Insights to help find merit aid and schools that fit the criteria most important to your student. You’ll not only save precious time, but your student will avoid the heartache of applying to schools they aren’t likely to get into or can’t afford to attend.
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