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Paying College Tuition With a Credit Card
By
Kayla Korzekwinski
Kayla Korzekwinski is a Scholarships360 content writer. She earned her BA from the University of North Carolina at Chapel Hill, where she studied Advertising/PR, Rhetorical Communication, and Anthropology. Kayla has worked on communications for non-profits and student organizations. She loves to write and come up with new ways to express ideas.
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Maria Geiger is Director of Content at Scholarships360. She is a former online educational technology instructor and adjunct writing instructor. In addition to education reform, Maria’s interests include viewpoint diversity, blended/flipped learning, digital communication, and integrating media/web tools into the curriculum to better facilitate student engagement. Maria earned both a B.A. and an M.A. in English Literature from Monmouth University, an M. Ed. in Education from Monmouth University, and a Virtual Online Teaching Certificate (VOLT) from the University of Pennsylvania.
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Many (but not all) schools allow paying college tuition with a credit card. In some instances, using a credit card to pay for tuition can earn you rewards and repayment flexibility. On the other hand, the processing fees and interest rates could outweigh these benefits. Depending on your financial situation, paying college tuition with a credit card may not be the best choice. Continue reading to learn more about the pros and cons of using a credit card to pay for tuition!
Also see: Credit card vs. debit card: Which is better?
Pros of paying tuition with a credit card
Paying college tuition with a credit card is possible for most schools. In some cases, it can be a good option.
First, you should only pay college tuition using a credit card if your school doesn’t charge a processing fee. If the average processing fees run between 2% to 3%, you could lose any rewards benefits. For example, if tuition is $20,000, and the credit card fee is 2.5%, you could end up losing $500 extra.
On the other hand, if your college does not charge a processing fee, you could earn rewards for paying with a credit card. If your credit card offers 1% cash back on payments, you could earn $200 on that $20,000 payment. Additionally, some credit cards offer an annual bonus for customers who spend a certain amount. Depending on how much the bonus is, it could be worth it to pay tuition to reach the spending requirement. Just be sure that you can make your repayments in full and on time!
Cons of paying tuition with a credit card
Processing fees charged by the college
Paying tuition with a credit card can earn students rewards as long as there is no processing fee. Though, not many schools don’t have a credit card processing fee. Be sure to check with your school before paying with a credit card in order to earn your rewards.
High (and ever rising) interest rates
Additionally, the credit card’s interest rate could cancel out those rewards. From July 2023 to 2024, Federal Direct loans had an interest rate of 5.5%. This is a significantly lower interest rate than that of credit cards, which averaged 21.47% at the start of January 2024. If your credit card payments aren’t made in a timely manner, any rewards you earn will be canceled out. In the end, you could pay more than you would have with student loans.
See also: How to get your student loans deferred
Credit score
Using a credit card to pay tuition could also negatively affect your credit score. Missed payments will hurt your payment history and drop your credit score. Payment history is the biggest factor in calculating a credit score, so missing the repayment for tuition will decrease it. If you don’t pay off the balance quickly, your credit utilization will increase. The more debt you have, the more your credit score could drop. It could also affect your credit mix. If you only use a credit card, you’ll miss out on the positive contribution that student loans and other forms of credit could make to your credit score.
See also: How do student loans affect credit?
Lastly, credit card payments typically have less flexible repayment assistance. If money is tight, you have no choice but to find enough to make the minimum payment or miss the payment. Missing payments will harm your credit score. Student loans, on the other hand, can offer more flexible repayment options like income-driven repayment plans and deferment.
See also: All about income-driven repayment plans
Other options
Paying college tuition with a credit card should be a last resort option unless you’re certain that the pros will outweigh the cons for your financial situation. Other options for paying tuition include scholarships, grants, work-study and federal or private student loans. Many students use a combination of all these to cover the cost of college.
This doesn’t mean that you shouldn’t use a credit card at all to pay for college expenses. If you want to earn rewards or other credit card benefits, consider using one to pay for other expenses such as textbooks, food, or school supplies. Make sure that you apply for all the scholarships you qualify for while you are eligible–scholarships are free money that never needs repayment!
Frequently asked questions about paying tuition with a college credit card
Which credit card is best for tuition payments?
Do colleges charge students extra money when they use a credit card?
