The cost of higher education has continued to rise over the past two decades, making tuition a major expense for many families.
Although many colleges and universities accept credit cards for this payment, it is not always free. If you are responsible for tuition payment, should your award be issued to a credit card, paid by check, or withdrawn from your bank account? In this post, we’ll help you answer that question.
Can you pay tuition with a credit card?
It depends on your college. The first thing to look for is “[Insert college name here] Tuition Credit Card.” You’ll likely see the applicable 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 (eg my undergraduate alma mater, Wake Forest University).
- Tuition can be paid with a credit card at no additional fee (eg University of Nevada – Las Vegas, where I received my M.D.).
- Tuition can be paid by credit card with an additional fee (such as the 2.6% fee charged by the University of Florida, where I earned my MBA).
With the first option, if you can’t pay tuition with a credit card, you’re out of luck – several institutions impose this restriction. 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 that do not charge card processing fees
If you can pay tuition with a credit card and not incur additional service fees, you should definitely do so — and be thankful that you can.
Just make sure you pay in full when your statement is due, which is our number one mandate for credit cards. If you can’t carry the balance and keep it, any interest and finance charges will easily cancel out any points or miles you earn with the purchase.
Unfortunately, the number of schools that fall into this second category is relatively small. In fact, I looked at US News & World Report’s list of the nation’s top 100 national universities and found only four that allow no-fee credit cards for tuition:
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- State University of New York (SUNY) – Binghamton
- Sunny – Stony Brook
- SUNY – College of Environmental Science and Forestry
- SUNY – Buffalo
Plus, it turns out that most, if not all, New York state universities don’t charge a fee for paying with a card, so if you’re looking at or already attend one of these schools, you’re in luck.
There are other exceptions I found for certain classes of students. For example, part-time students at Boston University can pay by credit card without a fee, as can most graduate students at Northeastern.
Paying a fee for using a credit card
Where things get more complicated is the third category. About two-thirds of top national universities allow credit card payments, with fees ranging from 2% (Penn State University) to 2.99% (Brandeis University). When paying tuition with a credit card, should you charge a fee?
As with most of what we cover at The Points Guy, the answer isn’t absolute: “Yes, but only under certain circumstances.” It’s usually worth it if the value you’re earning on a rewards credit card is greater than the fees you’re paying — but that math can be a bit more involved with some cards.
Let’s take a look at where this means.
Earn a welcome offer
The first scenario under which you should consider paying tuition with a credit card involves credit card welcome bonuses. Many top travel rewards credit cards offer large amounts of points or miles for reaching a certain level of spending within a certain time frame.
In some cases, your normal expenses may not be enough to get you there. If charging a fee for tuition payments is the only possible way to meet the minimum spending threshold required to earn the bonus, it may make sense to do so.
Related: 100,000-point sign-up bonus or higher card
For example, let’s say you were interested in the 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 within the first three months of account opening.
Based on TPG’s valuation, this offer is worth $1,230. Depending on your spending habits, you may or may not reach this spending threshold on your daily purchases. As we approach the new academic year — and tuition payments are right around the corner — you may be wondering if you should pay with the new Chase Sapphire Preferred to lock in thousands of points in sign-up bonuses and more.
If the tuition payment in question is $20,000 and your college charges a 2.6% fee, it will incur an additional $520 in fees. However, by doing so, you can earn a 60,000-point offer and 20,520 points for purchases yourself (at a standard earning rate of 1 point per dollar spent). Those 80,520 points are worth $1,651, according to TPG’s assessment — considerably more than the $520 fee the college charges.
RELATED: Why the Chase Sapphire Choice Should Be Your First Card
Again, this logic only applies if you have no other way to spend the amount required to earn the sign-up bonus. If you can meet that threshold in another (fee-free) way, you’re much better off doing that and using a different method to pay tuition that doesn’t charge fees.
Earn valuable rewards
Another time you should consider swiping a card for tuition is when the points or miles you earn are worth more than the fees you spend. This is a very gray area since everyone has their own way of valuing different loyalty currencies.
A good place to start is our monthly assessment to get a ballpark of how much you can get from your points and miles to help you determine the best credit to pay for college tuition. However, keep in mind that these assessments generally apply to redeeming points for maximum value, especially when it comes to transferable points currency, so the math may not make sense if you’re redeeming your points directly.
Here are a few examples of when the points or miles you earn will outweigh the additional fee:
- Chase Freedom Unlimited: This card offers 1.5% cash back on all purchases, but if you also hold a “premium” card e.g. Chase Sapphire Reserve, You can convert those cash-back earnings into full Ultimate Rewards points. This equates to earning 1.5 points per dollar spent on every purchase. Since TPG values Ultimate Rewards points at 2.05 cents, you’re essentially getting a 3.1% return. 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.
- Business Platinum Card® from American Express: This may seem odd on the surface since Amex Business Platinum only offers 1 Membership Rewards point per dollar spent. However, it 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 over $5,000, you’ll earn 1.5 points per dollar spent. TPG Peg Membership Rewards is 2 cents per point, so you’ll get a 3% return on purchases of $5,000 or more. Again, if the fee for using a card is less than that, 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 see if the fee makes sense.
- Capital One Venture Rewards Credit Card And Capital One Venture X Rewards Credit Card: These cards offer unlimited 2 miles per dollar on all purchases So, TPG’s Capital One Mile is priced 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 see if it makes sense to charge the fee.
Uses an introductory annual percentage rate (APR) offer
Spending a fee on a credit card for final term tuition is decidedly less glamorous but still important.
With the cost of higher education so high, many parents aren’t able to cover an entire semester’s tuition with cash in the bank or money in a college fund. As a result, financial aid packages have become ubiquitous, with more than 80% of college students receiving 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 (APR) offer can be the best credit card for tuition. These cards typically allow you an initial “grace period” to pay off your purchases without interest before being subject to the standard rate.
This can be a great option if you’ve exhausted funds in a 529 college savings plan, don’t want to saddle your kids with student loans, and can finish paying off the entire balance before the promotion ends. Note that these purchases are also eligible to earn points or miles.
Again, I should reiterate that you must be able to pay off the balance in full before the promotion period ends. Otherwise, you’ll be subject to an APR much higher than you’d get on any other loan.
Related: Best Balance Transfer Credit Cards
Whether you’re just starting out or a points and miles expert, you’re hopefully looking for a way to maximize your everyday spending with a travel rewards credit card; Paying tuition with a credit card is a solid option for earning points and miles.
At this time of year, those efforts inevitably turn to college tuition payments. However, individual establishments may charge you for the convenience of swiping your favorite brand of plastic (or prevent you from doing so altogether).
If you incur a fee for using a card, there may be instances where it makes sense, so do your research to determine the best credit card for paying college tuition. I hope this post has helped explain exactly when that is the case.
Related: TPG’s Beginner’s Guide to Credit Cards: What You Need to Know