Bonus Tip: Using a Credit Card to Pay for College Tuition

Tuition costs have consistently risen over the past twenty years, becoming a significant financial burden for many families.

Although numerous colleges and universities accept credit card payments for tuition, it may not always come without fees. If you're in charge of making tuition payments, should you reach for your rewards credit card, write a check, or withdraw cash? This post will guide you in making that decision.

Is it possible to pay tuition using a credit card?

It varies by institution. Start by searching for "[Insert college name here] credit card tuition payment." You should find the relevant information among the top results. If it’s not available online, contact the finance or registrar's office directly.

Colleges and universities typically fall into one of three categories regarding credit card tuition payments:

1. Tuition payments cannot be made using a credit card (as is the case with my undergraduate institution, Wake Forest University).
2. Tuition can be paid with a credit card without incurring extra fees (such as at the University of Nevada — Las Vegas, where I received my M.Ed.).
3. Tuition payments can be made via credit card but with an added fee (for instance, the 2.6% fee from the University of Florida, where I completed my M.B.A.).

For the first scenario, if your school doesn’t allow credit card tuition payments, you have limited options—many institutions enforce these restrictions. However, here’s what to do if your school is not in this category.

Colleges that waive credit card processing fees

If your college allows tuition payments via credit card without an extra fee, definitely take advantage of it—and appreciate the opportunity.

Just ensure you can pay off the total balance when your statement arrives, which is our top rule for credit card use. If you can’t and need to carry a balance, any accrued interest or finance charges could easily outweigh the rewards or miles earned from the purchase.

Sadly, the number of institutions in this category is quite limited. I reviewed U.S. News & World Reports' list of the top 100 national universities in the country and found only four that allow credit card tuition payments without any fees.

• Binghamton University, SUNY
• Stony Brook University, SUNY
• College of Environmental Science and Forestry, SUNY
• University at Buffalo, SUNY

Additionally, it seems that nearly all state universities in New York do not impose fees for credit card payments. So, if you’re considering or are already enrolled at one of these institutions, you're fortunate.

I discovered other exceptions for specific groups of students. For instance, part-time students at Boston University can make tuition payments with a credit card at no additional cost, as can most graduate students at Northeastern University.

Using a credit card incurs a fee

The third category complicates matters. Approximately two-thirds of the leading national universities accept credit card payments, with fees varying from 2% (at Penn State University) to 2.99% (at Brandeis University). So, is it worth it to pay tuition with a credit card if a fee is involved?

As with many topics we explore at Dinogo, the answer isn't straightforward. Generally, it’s beneficial if the rewards you gain from a credit card exceed the associated fees—but this calculation can become quite complex with certain cards.

Let’s examine situations where using a credit card would be advantageous.

Taking advantage of a welcome bonus

The first instance where using a credit card for tuition might be worthwhile is when it comes to welcome bonuses. Numerous premier travel rewards cards provide substantial points or miles for meeting specific spending thresholds within a designated period.

Sometimes, your regular spending might fall short of the required threshold. If the only way to meet the minimum spending requirement for a bonus involves incurring a fee for tuition payments, it may be worth considering that option.

For instance, suppose you're interested in the Chase Sapphire Preferred® Card and its current sign-up offer of 60,000 points. You would earn 60,000 Ultimate Rewards points after spending $4,000 within the first three months of opening your account, along with a $300 statement credit on Chase Travel℠ purchases made within the first year.

Depending on how you typically spend, you might find it challenging or easy to hit this spending target with your regular purchases. As the new school year approaches and tuition payments loom, you may be contemplating whether to use your new Chase Sapphire Preferred card to secure the sign-up bonus and accrue additional points.

If your tuition payment amounts to $20,000 and your institution imposes a 2.6% fee, that adds an extra $520 in charges. However, by doing this, you’d earn the 60,000-point bonus plus an additional 20,520 points from the purchase itself (at the standard rate of 1 point per dollar spent). In total, this would yield 80,520 points, valued at $1,651 according to TPG's July 2024 valuations — significantly surpassing the $520 fee charged by the college.

This reasoning only holds true if you lack alternative methods to reach the required spending to earn the sign-up bonus. If you can achieve that threshold through other (fee-free) options, it’s wiser to pursue those and use a different payment method for tuition that avoids additional charges.

Earning valuable rewards

Another scenario where using a card for tuition payments is advisable is when the points or miles you’d earn outweigh the fees you’ll pay. This can be quite subjective since everyone has their unique way of valuing various loyalty currencies.

A good starting point is our monthly valuations, which can give you an estimate of the potential value of your points and miles to help you choose the best credit card for tuition payments. However, remember that these valuations usually apply to redeeming points for maximum value, particularly with transferable point currencies, so the calculations may not add up if you redeem points directly.

Here are a couple of instances when the points or miles you’d earn would outweigh the extra fee:

• Chase Freedom Unlimited®: This card provides 1.5% cash back on all purchases. However, if you also have a "premium" card like the Chase Sapphire Reserve®, you can convert that cash back into full Ultimate Rewards points. This effectively means earning 1.5 points per dollar spent. With TPG's July 2024 valuations estimating Ultimate Rewards points at 2.05 cents each, you’re looking at a return of 3.1%. If the fee for using a credit card for tuition is lower than this rate, it’s beneficial to use the Chase Freedom Unlimited.
• The Business Platinum Card® from American Express: While this card seems less appealing at first glance, offering just 1 Membership Rewards point per dollar spent, it provides a 50% bonus on purchases of $5,000 or more (up to $2 million annually). So, for tuition payments exceeding $5,000, you'll earn 1.5 points per dollar. TPG's July 2024 valuations value Membership Rewards points at 2 cents each, resulting in a 3% return on those larger payments. If the fee for card usage is lower than this, then using the card makes sense. As always, adjust these figures according to your personal valuations and check your school's credit card payment policy to see if incurring the fee is worthwhile.
• Capital One Venture Rewards Credit Card and Capital One Venture X Rewards Credit Card: Both cards offer an unlimited 2 miles per dollar on all purchases. With TPG's July 2024 valuation of Capital One miles at 1.85 cents each, this results in a 3.7% return on all purchases.

As always, tailor these figures based on your own valuations and assess your school's credit card payment policy to determine if incurring the fee is sensible.

Utilizing an introductory annual percentage rate (APR) offer

The final situation where incurring a fee for credit card tuition payments makes sense is certainly less exciting, yet significant.

With the soaring costs of higher education, many parents find it challenging to pay for an entire semester's tuition with savings or funds from a college account. Consequently, financial aid packages have become the norm, with over 80% of college students receiving some form of assistance. However, student loans frequently carry steep interest rates.

This is where a new credit card offering an introductory 0% APR becomes an excellent choice for tuition payments. These cards typically provide a "grace period" during which you can pay off your purchases without incurring interest before standard rates apply.

This option can be particularly appealing if you've depleted your 529 college savings plan, want to avoid burdening your children with student debt, and can pay off the entire balance before the promotional period concludes. Plus, these transactions also qualify for earning points or miles.

I must emphasize again that you need to be able to settle the full balance before the promotional period ends. Failing to do so will subject you to an APR significantly higher than what you’d find on most loans.

Final thoughts

Whether you're new to the game or a seasoned points and miles aficionado, you're likely on the lookout for ways to maximize your everyday expenses with travel rewards credit cards; using a credit card to pay tuition is a great way to rack up points and miles.

As we approach this time of year, many focus their efforts on college tuition payments. However, different institutions may impose fees for the convenience of using your preferred credit card (or might even restrict card payments altogether).

If you do face a fee when using a card, there may be scenarios where it's worth it, so conduct your research to find the best credit card for paying college tuition. I hope this article has clarified when such situations arise.