Pay college tuition with a credit card: Smart move or sign of desperation?

It can be savvy or dangerous, depending on your situation

Holly Johnson
Personal finance writer
Covers credit card rewards stories

Pay college tuition with a credit card: Smart move or sign of desperation?

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College tuition is paid with credit more often than you might think – and for reasons that might surprise you. 

Some people use plastic for tuition as part of a comprehensive rewards strategy, while others pay with credit because it’s easiest. Inevitably, some consumers charge tuition because they aren’t sure what else to do.

Is charging college tuition to a credit card savvy or dangerous? As the people interviewed below prove, it really depends.

Do it for the points

Vicki Cook of Canandaigua, New York, paid college tuition with a credit card during the 2015-16 school year and made bank on the deal. 

Her child was attending SUNY Geneseo, so both she and her husband applied for the then-new Chase Sapphire Reserve card. The sign-up bonus was 100,000 points at the time, so they each charged $5,000 to their cards to meet their $4,000 minimum spending requirements in one fell swoop.

Cook had the money saved to cover tuition in her child’s 529 account, so she withdrew the cash to cover the credit card bills. She says this was possible because in New York, you can have 529 funds sent directly to your college or to yourself as reimbursement for tuition bills you paid.

Since Cook had a Southwest Airlines Companion Pass – a perk that lets your companion fly free – she transferred her points to Southwest for cheap flights back and forth to the family condo in Florida for a while. 

Cook’s child’s school didn’t charge a convenience fee to use credit, but that isn’t always the case. Not all schools accept credit cards, and some that do charge an average convenience fee of 2.62 percent, according to a CreditCards.com survey of 300 largest U.S. private, public and community colleges.

Convenience fees can eat up your rewards

Emily Guy Birken of Milwaukee found out about convenience fees the hard way. Her husband has been pursuing a master’s degree in engineering online at the University of Wisconsin in Madison, and they have been paying approximately $6,700 per semester with her IHG Rewards Club Select Mastercard (now the IHG Rewards Club Premier Credit Card) since August 2017. Their 10th anniversary is coming up, she said, and they plan to use their rewards to cover some free hotel stays.

Since her husband’s employer reimburses the couple for 90 percent of his tuition, Guy Birken thought their strategy was solid. But, she quickly discovered the devil is in the details. Once she dug around to find her receipts, she discovered his school charges a 2.5 percent convenience fee, which tacked on an extra $167.50 each semester.

“This is what happens when my husband does the finances,” Guy Birken said. “Usually I handle these things.”

Beyond the convenience fee, consumers should also make sure they have the cash to pay their credit card bills right away if they go this route. Considering the average credit card interest rate just reached 17 percent according to the CreditCards.com Weekly Credit Card Rate Report, carrying a balance would be a costly proposition that would easily wipe out any rewards you earned. So, if rewards are your goal but you need time to pay off college bills, consider other college funding strategies and skip credit altogether.

See related: The college student's guide to earning points, miles and rewards

Charging it can be the simpler option

Sometimes it’s all about the convenience, and rewards are a secondary consideration. This was the case for Julie Rains, a Winston-Salem, North Carolina, resident with a son at Virginia Tech. Rains paid her son’s $5,500 tuition bill in August 2015 and a $4,200 bill in the spring of 2016 with her Citi / AAdvantage Platinum Select Mastercard (now the Citi / AAdvantage Platinum Select World Elite Mastercard), along with a handful of miscellaneous payments since. While Rains did earn airline miles for the charges, she said she mostly paid with credit out of convenience. 

Rains, her husband and her youngest son were hiking the Tour du Mont Blanc in Europe when the tuition bills were released. It took her a while to get access to the bills due to privacy laws, and she couldn’t get authorized to pay on her son’s account while they were traveling. When she got back from her trip, she quickly received approval to pay, and then used her credit card – but only because she and her husband had a plan in place.

“I had the resources to pay for my son's college tuition, but needed to sell some shares of stock and transfer money to my checking account before I could pay the bill,” she said. “So, I used the credit card with the intention of paying off the balance after sorting through the logistics of moving money around.”

While Rains did pay a 2.75 percent convenience fee in this case, she felt the fee was worth it. She was able to cover tuition quickly without delay, and she earned some airline miles in the process. Last year, Rains and her family used some of those miles to fly to London and Scotland.

Cards are not a substitute for student loans

Amy McMullen of Leesburg, Virginia, put her college tuition on a credit card out of sheer desperation. She was attending George Mason University School of Law at the time (the school has since been renamed the Anton Scalia School of Law) and ran short on funds for tuition. 

This was 2006, and she charged around $5,000, she says, mostly because she was 24 years old and didn’t think through the decision. She had a credit card that let her earn points with a fairly low introductory interest rate of 2 to 3 percent, so she was already racking up debt via dinners out and new clothes for work. Why not add college tuition to the pile?

McMullen didn’t want to go to the trouble of applying for more student loans, and it didn’t seem like a big deal to charge her tuition to her Citi credit card, she says. This was a big mistake because she “ended up with a huge mound of debt for maybe $100 in restaurant gift cards.” 

McMullen was featured in a Bankrate money makeover in 2009, and has made great financial progress since her previous indiscretions. Still, paying down credit card bills left her further behind in retirement savings than she should be. 

See related: 4 reasons why college students need a credit card 

Think before you swipe for tuition 

If you decide to use a credit card for college tuition, it’s wise to think long and hard before you do, since there are scenarios where it just doesn’t make sense: 

  • You plan to carry a balance. If you need time to pay off your education expenses like McMullen, you’ll be much better off with federal student loans. These loans come with fixed interest rates as low as 5.05 percent, as well as access to federal programs like deferment, forbearance and income-driven repayment plans.
  • Convenience fees cost more than the value of rewards. Sometimes rewards outweigh convenience fees, but this isn’t always the case. If you’re using a cash-back card that doles out 1 percent on all your purchases, but your college charges 2.5 percent to use a credit card, you’re on the losing end of that deal.

While there are myriad pitfalls to be aware of any time you use a credit card, paying college tuition with plastic can make sense provided the pros outweigh the cons. You can charge tuition and get ahead if you have the right incentives, such as the potential for cash-back or travel rewards or a convenience factor that makes any fees you’ll pay worth it.


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Updated: 10-18-2018