College Tuition & Credit Cards: A Bad Mix | CreditShout

College Tuition & Credit Cards: A Bad Mix

college tuition and credit cards are a bad mix


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It's no secret that college is expensive. Tuition is increasing steadily each of the last 40 years.  Some out there might be tempted to pay part of their college tuition by credit card. Don't do it! Credit cards and tuition are a bad mix!

The Cost of College Tuition

In 1971, the annual tuition cost at Harvard was $2,600. In 2015, the tuition hit more than $45,000. The is over 17 times as much as the 1971-72 school year. This rate of tuition increase also surpasses inflation. Making that college degree harder and harder to afford without taking on student loan debt.

If the annual tuition hikes had tracked inflation, Harvard's tuition would be just $15,200 today.

Since college tuition steadily increases at a rate almost 6% higher than inflation, this puts pressure on families and students alike.

There are several ways to potentially pay for tuition, including scholarships and student loans. A growing number of universities and colleges in the United States are now offering another option: put it on your credit card.

While this may seem like an easy solution to help you afford tuition with monthly payments, it will come at a high cost. And we aren't just talking about interest.

Paying College Tuition By Credit Card

According to a new survey from, 85% of the 300 U.S.-based private, public, and community schools in the study accept credit cards for tuition payment.

More than half add a transaction fee for the service, however. The average transaction fee charged for using plastic was 2.62%.

Transaction fees for charging tuition are becoming more common, but the fees don't go to the school. Instead, they go to third-party payment processors.

The survey found that the average family that paid for tuition on a credit card charged $4,443 for the 2015-2016 school year. Students who used credit cards charged an average of $1,615.

Sallie Mae's "How America Pays for College 2016" report found that 2% of families with students charged tuition while 5% of students charged their tuition expenses.

Convenience Fees Add Up

As we said above, charging tuition on a credit card usually comes with a hefty "convenience" or transaction fee - which is, on average, 2.62%. With a $10,000 tuition charge, that's $262 in fees alone. The average family charging tuition pays a convenience fee of $116.

Even if you plan on paying off the bill in full prior to the end of your billing period, those convenience charges will easily swamp any credit card rewards you earn.

Tuition is already expensive enough without adding a fee of 2-3% just to pay with a credit card. And with 93% of public universities and more than one-third of private institutions charging transaction fees, it is likely you will incur a fee.

Are you starting to see why paying your tuition by credit card is a bad idea?

Substantial Interest Charges

If you can't pay off the balance in full by the end of the month, charging tuition becomes even more expensive. The interest you pay on the balance will significantly outweigh any benefits you may receive from a credit card rewards program.

And, once again, don't forget the cost of those pesky convenience charges. In fact, your interest costs may make the convenience fee look like pocket change.

The average interest rate on a credit card in 2016 is about 15%. With a $10,000 tuition charge, it would take about 30 years to pay off the balance with minimum payments with total interest charges of $11,979.

If you wanted to pay it off within a year, you would need to pay more than $900 a month and get hit with more than $831 in interest.

Just another reason we are warning you to avoid using your credit card to pay your tuition bills.

Avoid the Temptation of Credit Card Rewards

Unfortunately, rewards cards can make charging tuition more tempting, especially to college students with limited experience using credit.

We are almost ingrained to pay by credit card today. Especially when enjoying the perks of a great rewards card and combining that with paying our monthly bills in full.

However, unless you are charging a tuition balance that you can and will pay in full before the billing cycle ends AND the college does not charge a convenience fee, this won't be worthwhile.

The transaction fee alone will likely eat up even the most generous reward you may get from your card issuer.

Avoid the Bad Mix of Credit Cards and Tuition Bills


  1. You can charge your tuition without transaction fees (and that is a big if), and
  2. You will pay off the balance in full within your billing cycle, and
  3. You get rewards on the transaction, charging tuition can be beneficial. 

The truth is this is very rarely the case.

At the very least, you will end up paying a fee of 2-3% and at worst, you can be locking yourself into a cycle of debt that will cost hundreds or thousands in interest charges, making the already high cost of tuition difficult to manage.

Our advice, whether you are a student or a parent, is to avoid paying tuition bills by credit card.

Student loans are a much safer way to finance the cost of your education as the interest rate will be lower and you will have options like forbearance if you can't afford the payments.

However, this does not mean you should avoid using a credit card as a college student. Actually, we think college is the perfect time to learn to to responsibly use a credit card and build up your credit score.

So, if you are looking for student credit cards, check out our recommendations in this article, or learn more about student cards at

Click here to see additional student offers

Just remember, even if you find a great rewards card, not to give in to the temptation to use it to pay for your college education.

The editorial content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are the author's alone. Additionally, the opinions of the commenters are not necessarily the opinions of this site

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