Higher education is expensive has increased steadily Over the past two decades, tuition has become a major expense for many families.
While many colleges and universities accept credit cards for these payments, it’s not always free to do so. If you are responsible for tuition payments, should you pull out your rewards credit card, choose to pay by check, or withdraw from your bank account? In this post, we will help you answer the same question.
Can you pay tuition with a credit card?
It depends on your college. The first thing is to find “[Insert college name here] Tuition Credit Card.” You’ll likely see the Apply page in the first few results. If you can’t find that information online, call the finance or registrar’s office.
Generally speaking, the college or university in question will fall into one of three categories:
- Tuition cannot be paid with a credit card (such as my undergraduate alma mater, Wake Forest University).
- Tuition can be paid by credit card at no additional fee (eg University of Nevada – Las Vegasfrom which I obtained my M.Ed.).
- Tuition can be paid by credit card with additional fees (such as a 2.6% fee University of Florida, where I did my MBA).
With the first option, if you can’t pay tuition with a credit card, you’re out of luck — many institutions impose these restrictions. However, here’s what to do if your school doesn’t fall into that category.
RELATED: How to Pay Off Your Student Loans with a Credit Card
Colleges which do not charge card processing fee
If you can pay tuition with a credit card and not incur additional service fees, then you should – and be thankful that you can.
Just make sure you can pay the full amount when your statement is due, which is ours The number one commandment for credit cards. If you can’t carry a balance and must, any interest and finance charges will easily cancel out the points or miles you earn on purchases.
Unfortunately, the number of schools that fall into this second category is relatively small. In fact, I went through the US News & World Reports list Top 100 National Universities in the country and found only four that allow no-fee credit card payments for tuition:
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- State University of New York (SUNY) – Binghamton
- Sunny – Stony Brook
- SUNY – College of Environmental Science and Forestry
- Sunny – Buffalo
Additionally, it appears that most, if not all, New York state universities do not charge fees for paying by card, so if you’re looking at or already attend one of these schools, you’re in luck.
I found other exceptions for certain classes of students. For example, part-time students at Boston University can pay by credit card with no fee, as can most graduate students at Northeastern.
Paying a fee for using a credit card
The third category is where things get more complicated. About two-thirds of the top national universities allow credit card payments, with fees ranging from 2% (Penn State University) to 2.99% (Brandeis University). So, is it worth paying tuition with a credit card if you have to pay the fees?
In the case of most of what we cover at The Points Guy, the answer is a definite no. It’s usually worth it if the value you’re earning on a rewards credit card exceeds the fees you’re paying — but that math can get a little more involved on some cards.
Let’s take a look at where that would make sense.
Earning a welcome offer
The first scenario under which you should consider paying tuition with a credit card involves a credit card welcome bonus. Many top travel rewards credit cards offer large amounts of points or miles for reaching certain spending levels within a given time frame.
In some cases, your normal expenses may not be enough to get you there. If charging a fee on tuition payments is the only possible way to meet the minimum spending threshold required to receive the bonus, it may make sense to do so.
For example, let’s say you were interested in this Chase Sapphire Preferred® Card and its current sign-up bonus of 60,000 points. You’ll earn 60,000 bonus Ultimate Rewards points after you spend $4,000 on purchases in the first three months of account opening.
Depending on your spending habits, you may or may not reach this spending threshold on your everyday purchases. As we approach the new school year — and tuition payments are right around the corner — you may be wondering if you should pay with your new Chase Sapphire Preferred to lock in the sign-up bonus and thousands of points on top.
If the tuition payment in question is $20,000 and your college charges a 2.6% fee, this would incur $520 in additional fees. However, by doing so, you’ll get the 60,000-point offer plus 20,520 points for the purchase itself (at a standard earning rate of 1 point per dollar spent). These 80,520 points are worth $1,651—significantly more than the $520 fee charged by the college, according to TPG’s July 2024 assessment.
Once again, this logic only applies if you have no other way to spend the amount required to receive the sign-up bonus. If you can reach that threshold in other (fee-free) ways, you’re better off using a different method to pay tuition that won’t charge a fee.
Related: Cards with 100,000-point sign-up bonuses or more
Earn valuable rewards
Another time you should consider swiping a card for tuition is the points or miles you’ll earn are worth more than the fees. This is a very gray area as everyone has their own way of valuing different loyalty currencies.
Here are some examples of when the points or miles you earn will outweigh the extra fee:
- Chase Freedom Unlimited® This card offers 1.5% cash back on all purchases, but if you also have a “premium” card such as Chase Sapphire Reserve® You can convert those cash-back earnings into full Ultimate Rewards points, the equivalent of earning 1.5 points per dollar spent on every purchase. Since TPG’s July 2024 valuation puts Ultimate Rewards points at 2.05 cents each, you’re essentially getting a return of 3.1%. If the percentage fee for using a credit card for tuition is less than this amount, you’ll come out ahead using Chase Freedom Unlimited.
- The Business Platinum Card® from American Express: This seems odd on the surface since Amex Business Platinum only offers 1 Membership Rewards point per dollar spent. However, it also gives you 50% more points on purchases of $5,000 or more (up to $2 million per calendar year), so if your tuition payment is more than $5,000, you’ll earn 1.5 points per dollar spent. TPG’s July 2024 evaluation values Membership Rewards points at 2 cents each, so you’ll earn 3% back on purchases of $5,000 or more. Again, if the fee to use the card is less than this, go ahead and swipe the card. As always, be sure to adjust these numbers based on your own assessment and evaluate your school’s credit card payment policy to determine if it makes sense to charge the fee.
- Capital One Venture Rewards Credit Card And Capital One Venture X Rewards Credit Card: This card offers unlimited 2 miles per dollar on all purchases. Therefore, TPG’s July 2024 capital One Mile is valued at 1.85 cents, equating to a 3.7% return on all purchases.
As always, adjust these numbers based on your own assessment and evaluate your school’s credit card payment policy to determine if charging a fee makes sense.
Using an introductory annual percentage rate (APR) offer
Finalizing credit card fees for tuition is decidedly less glamorous but important.
Because the cost of higher education is so high, many parents cannot cover a full semester’s tuition with cash in the bank or money in a college fund. As a result, financial aid packages have become ubiquitous, as well Over 80% of college students receive some form of aid. However, student loans often come with high interest rates.
This is where a new credit card with an introductory 0% APR offer can be the best credit card for tuition. These cards typically allow you an initial “grace period” to pay off your purchases with no interest before they become subject to standard rates.
This can be a great option if you’ve exhausted funds in a 529 college savings plan, don’t want your children to be saddled with student debt, and can finish paying off the entire balance before the promotional period ends. Remember that these purchases are also eligible to earn points or miles.
Once again, I must reiterate that you must be able to pay the balance in full before the promotional period ends. Otherwise, you’ll be subject to a much higher APR than you’d get on almost any loan.
Related: Best Balance Transfer Credit Cards
Bottom line
Around this time of year, these efforts inevitably turn to paying college tuition. However, individual establishments may charge you for the privilege of swiping your favorite brand of plastic (or prevent you from doing so altogether).
If you charge a fee for using the card, there may be cases where it makes sense, so do your research to determine the best credit card to use to pay college tuition. I hope this post has helped explain exactly when that is the case.
Related: TPG’s Beginner’s Guide to Credit Cards: Everything You Need to Know