Depending on what your college or university treasurer’s office allows, you may be able to pay for your tuition with a credit card.
While you can get more flexibility and even earn reward points by paying tuition with credits, you may have to pay the fees and may end up spending more on interest. Most financial experts will advise you that you should only pay for tuition with a credit card if you negotiate payment directly with the college or university.
Can you pay for college with a credit card?
Some (but not all) colleges and universities allow students the option to pay for college with a credit card. To find out if this is an option for you to pay your tuition, contact your Treasurer’s office and ask about any fees for using credits to pay for school expenses.
Will it cost more money to pay for college with a credit card?
Unlike paying for tuition through a checking account or loan, paying for college with a credit card may result in a charge to the school for using the credit card.
It costs money to accept credit card payments, and colleges and universities usually (but not always) pass these fees on to students. Your Treasurer’s office will provide detailed information about any fees that may be charged to you.
When evaluating the overall cost of college, credit card rates are almost always higher than student loan rates, making student loans a cheaper tuition option than credit cards.
Can paying for college with a card hurt your credit?
Paying for college with a card can hurt your credit – especially if you don’t pay the amount owed on the card.
Spending large amounts on your credit card can affect your credit by:
Your credit utilization ratio will increase. Using your credit card to pay for school without paying off the balance may result in an increase in your credit card debt, which can cause your credit score to drop.
Your credit portfolio may be affected. Having only one type of credit on your credit history may be a negative factor in calculating your credit score, so using credit instead of loans can reduce your credit portfolio.
Missed payments can harm your payment history. If your tuition causes you to miss a credit card payment, your credit score will drop significantly. Since payment history is a large part of your credit score, missing even one payment can lower your credit score.
Benefits of paying for college with a credit card
Relying on a credit card to pay for tuition does have certain advantages for students:
You gain repayment flexibility. Tuition or student loan bills usually require a fixed amount to be paid each payment period (e.g., month or semester). A credit card, on the other hand, can be paid off over a longer period of time.
You may be able to earn rewards. Putting a large balance on your card can earn you rewards in the form of dollars, points or travel miles. For example, charging $10,000 in tuition on your credit card will earn you $150 in rewards, based on a typical 1.5% purchase reward rate.
The risks of paying for college with a credit card
Paying tuition with a credit card is not without risk:
Fees may exceed any rewards you earn. Fees are common when paying for tuition with a credit card. It’s hard to find card rewards rates that exceed 2% – but you’ll probably have to pay at least that much to get tuition charges credited to your card.
You may pay more interest than you would on a student loan. in 2019, credit card interest rates are averaging around 17%. Meanwhile, federal student loan interest rates for the 2019-20 academic year range from 4.5% to 7%.
You’ll lose some features unique to student loans. There are several options for repaying your federal student loans, such as a repayment plan tied to your income, interest-only repayment or deferment. When you use your credit card to charge your tuition, these options disappear.
You may be putting your credit at risk. Paying tuition with a credit card increases your credit utilization ratio, which may immediately lower your credit score. If you fail to pay your credit card debt, your score is sure to drop further.
Paying for college with a credit card
If your college or university allows it, you can pay for college with a credit card. However, if you pay your tuition with a credit card, you could end up spending more on interest and paying hundreds of dollars in fees. Learn more about the full cost of this tuition financing option by talking to your Registrar’s office
