A guide to paying college tuition with a credit card

Larger schooling prices have steadily increased during the last twenty years, making tuition a large expense for a lot of households.

Whereas many schools and universities settle for bank cards for these funds, it is not all the time free to take action. Should you’re liable for tuition fee, must you pull out your rewards credit card, go for paying with a test or withdraw out of your checking account?

On this publish, we’ll provide help to reply that very query.

1. Tuition cannot be paid with a bank card (resembling my undergraduate alma mater, Wake Forest University).
2. Tuition might be paid with a bank card with no further price (such because the University of Nevada — Las Vegas, from which I obtained my M.Ed.).
3. Tuition might be paid with a bank card with an extra price (resembling the two.75% price charged by the University of Florida, the place I earned my M.B.A.).

With the primary choice, if you cannot pay tuition with a bank card, you are out of luck — a number of establishments impose these restrictions. Nonetheless, this is what to do in case your faculty would not fall into that class.

Associated: Can you pay your student loans with a credit card?

Simply make certain you possibly can repay your entire quantity when your assertion comes due, which is our number one commandment for credit cards. If you cannot and should carry a stability, any curiosity and finance costs will simply cancel out the factors or miles you’d earn on the acquisition.

Each day Publication

Reward your inbox with the TPG Each day publication

Be part of over 700,000 readers for breaking information, in-depth guides and unique offers from TPG’s consultants

Sadly, the variety of faculties that fall into this second class is comparatively small. In truth, I went by way of U.S. Information & World Reviews’ checklist of the top 100 national universities within the nation and located solely 4 that permit no-fee bank card funds for tuition:

• State College of New York (SUNY) — Binghamton
• SUNY — Stony Brook
• SUNY — School of Environmental Science and Forestry
• SUNY — Buffalo

Moreover, it seems that most, if not all, state universities in New York do not cost charges for paying with a card, so in the event you’re or already attending one among these faculties, you are in luck.

I discovered different exceptions for sure courses of scholars. For instance, part-time college students at Boston College pays by way of bank card with no price, as can most graduate college students at Northeastern.

Paying a price for utilizing a bank card

The third class is the place issues get extra difficult. About two-thirds of the highest nationwide universities permit bank card funds, with charges starting from 2.25% (Penn State College) to 2.85% (Brandeis College). So, is it price paying tuition with a bank card if you need to pay a price?

As is the case with a lot of what we cowl at TPG, the reply is not absolute. It is sometimes price it if the worth you are incomes on a rewards bank card is greater than the price paid — however that math can get a little bit extra concerned on some playing cards.

Let’s check out the place it will make sense.

Incomes a welcome supply

The primary situation below which you must contemplate paying tuition with a bank card includes bank card welcome bonuses. Many prime journey rewards bank cards supply giant quantities of factors or miles for reaching a sure spending stage in a given timeframe.

Generally, your regular spending is probably not sufficient to get you there. If the one potential means of assembly the required minimal spending threshold to earn a bonus is to incur a price on tuition funds, it may make sense to take action.

For instance, as an example you have been within the Chase Sapphire Preferred® Card and its present sign-up bonus. New cardholders can earn 60,000 Final Rewards factors after spending $4,000 on purchases within the first three months of account opening. It’s possible you’ll marvel in the event you ought to pay along with your new Chase Sapphire Preferred to lock within the sign-up bonus and hundreds of factors on prime of that.

If the schooling fee in query is $20,000 and your faculty costs a 2.6% price, this could tack on an extra $520 in charges. Nonetheless, in doing so, you’d earn the 60,000-point supply plus 20,520 factors for the acquisition itself (at the usual incomes fee of 1 level per greenback spent). These 80,520 factors are price $1,651 in line with TPG’s December 2024 valuations — greater than triple the $520 price the school costs.

As soon as once more, this logic solely applies in case you have no different strategy to spend the required quantity to earn the sign-up bonus. Should you can reach that threshold in other (fee-free) ways, you are a lot better off doing that and utilizing a unique technique to pay the schooling that will not incur a price.

Associated: 12 cards currently offering welcome bonuses of 100,000 points or more

An excellent place to begin is our monthly valuations to get a ballpark of how a lot you will get out of your factors and miles that will help you determine the very best credit score to make use of for paying faculty tuition. Nonetheless, keep in mind that these valuations sometimes apply to redeeming points for maximum value, particularly in terms of transferable point currencies, so the mathematics could not make sense in the event you redeem your factors straight.

Listed below are a few examples of when the factors or miles you’d earn would outweigh the extra price:

• Chase Freedom Unlimited® This card provides 1.5% money again on all purchases, however in the event you additionally maintain a “premium” card such because the Chase Sapphire Reserve®, you possibly can convert these cash-back earnings into full Ultimate Rewards points. That is the equal of incomes 1.5 factors per greenback spent on each buy. Since TPG’s December 2024 valuations peg Final Rewards factors at 2.05 cents apiece, you are primarily getting a return of three.1%. If the share price for utilizing a bank card for tuition is lower than this quantity, you will come out forward by utilizing the Chase Freedom Unlimited.
• The Business Platinum Card® from American Express: This will likely appear unusual on the floor because the Amex Enterprise Platinum solely provides 1 Membership Rewards level per greenback spent. Nonetheless, it additionally offers you 50% extra factors on purchases of $5,000 or extra (as much as $2 million per calendar 12 months). So, in case your tuition fee exceeds $5,000, you will earn 1.5 factors per greenback spent. TPG’s December 2024 valuations peg Membership Rewards factors at 2 cents apiece, so that you’d get a return of three% on these purchases of $5,000 or extra. Once more, if the price for utilizing a card is lower than this, go forward and use the cardboard. As all the time, be sure you regulate these numbers primarily based by yourself valuations and consider your faculty’s bank card fee coverage to find out whether or not it is sensible to incur the price.
• Capital One Venture Rewards Credit Card and Capital One Venture X Rewards Credit Card: These playing cards supply limitless 2 miles per greenback on all purchases. With TPG’s December 2024 valuation of Capital One miles at 1.85 cents apiece, that is equal to a 3.7% return on all purchases.

As all the time, regulate these numbers primarily based by yourself valuations and consider your faculty’s bank card fee coverage to find out whether or not incurring the price is sensible.

With the worth of upper schooling so excessive, many mother and father aren’t in a position to cowl a full semester’s tuition with money within the financial institution or cash in a school fund. Consequently, monetary help packages have turn into ubiquitous, with over 80% of college students receiving some form of aid. Nonetheless, scholar loans usually include excessive rates of interest.

That is the place a new credit card with an introductory 0% APR supply might be the very best bank card for tuition. These playing cards usually permit you an preliminary “grace interval” to repay your purchases with no curiosity earlier than they turn into topic to plain charges.

This is usually a nice choice in the event you’ve exhausted the funds in a 529 faculty financial savings plan, don’t need your youngsters to be saddled with scholar debt and might end paying off your entire stability earlier than the promotional interval ends. Do not forget that these purchases are additionally eligible to earn factors or miles.

As soon as once more, I ought to reiterate that you could be capable to repay the complete stability earlier than the promotional interval ends. In any other case, you will be topic to an APR a lot greater than the speed you’d get on nearly any mortgage.

Associated: The best balance transfer credit cards

Whether or not you are just getting started or are a factors and miles professional, you are hopefully on the lookout for any strategy to maximize your each day spending by way of travel rewards credit cards; paying tuition with a bank card is a stable choice to earn factors and miles. Nonetheless, particular person establishments could cost you for the privilege of utilizing bank cards (or could forestall you from doing so solely).

Should you incur a price for utilizing a card, there could also be cases the place it is sensible, so do your analysis to find out the very best bank card to make use of to pay faculty tuition. I hope this publish has helped illustrate precisely when that is the case.

Associated: TPG’s beginner’s guide to credit cards: Everything you need to know