Extra credit: How to pay college tuition with a credit card

Editor’s note: This is a recurring post, regularly updated with new information and offers.

Higher education costs have been steadily increasing over the last two decades, making tuition a sizable expense for many families.

While many colleges and universities accept credit cards for these payments, it isn’t always free to do so. If you’re responsible for tuition payment, should you pull out your rewards credit card, opt for paying with a check or withdraw from your bank account? In this post, we’ll help you answer that very question.

Can you pay tuition with a credit card?

It depends on your college. The first thing to do is search for “[Insert college name here] tuition credit card.” You’ll likely see the applicable page in the first few results. If you can’t find that information online, call the finance or registrar’s office.

Generally speaking, the college or university in question will fall into one of three categories:

Tuition can’t be paid with a credit card (such as my undergraduate alma mater, Wake Forest University).
Tuition can be paid with a credit card with no additional fee (such as the University of Nevada – Las Vegas, from which I obtained my M.Ed.).
Tuition can be paid with a credit card with an additional fee (such as the 2.6% fee charged by the University of Florida, where I earned my M.B.A.).

With the first option, if you can’t pay tuition with a credit card, you’re out of luck — several institutions impose these restrictions.

Colleges that don’t charge card processing fees

On the other hand, if you can pay tuition with a credit card and not incur an additional service fee, then you absolutely should do it — and be grateful that you can.

Just be sure you can pay off the entire amount when your statement comes due, which is our number one commandment for credit cards. If you can’t and must carry a balance, any interest and finance charges will easily cancel out the points or miles you’d earn on the purchase.

Unfortunately, the number of schools that fall into this second category is relatively small. In fact, I went through U.S. News & World Reports’ list of the top 100 national universities in the country and found only four that allow no-fee credit card payments for tuition:

State University of New York (SUNY) – Binghamton
SUNY – Stony Brook
SUNY – College of Environmental Science and Forestry
SUNY – Buffalo

Furthermore, it appears that most, if not all, state universities in New York don’t charge fees for paying with a card, so if you’re looking at or already attending one of these schools, you’re in luck.

There are other exceptions I found for certain classes of students. For example, part-time students at Boston University can pay via credit card with no fee, as can most graduate students at Northeastern.

Paying a fee for using a credit card

Where things get more complicated is the third category. About two-thirds of the top national universities allow credit card payments, with fees ranging from 2% (Penn State University) to 2.99% (Brandeis University). When paying tuition with a credit card, should you incur a fee?

As is the case with much of what we cover at The Points Guy, the answer isn’t absolute: “Yes, but only in certain circumstances.” It’s typically worth it if the value you’re earning on a rewards credit card is more than the fee paid — but that math can get a little more involved on some cards.

Let’s take a look at where it would make sense.

Earn a sign-up bonus

The first scenario under which you should consider paying tuition with a credit card involves credit card welcome bonuses. Many top travel rewards credit cards offer large amounts of points or miles for reaching a certain level of spending in a given time frame.

In some cases, your normal spending may not be enough to get you there. If the only possible way of meeting the required minimum spending threshold to earn a bonus is to incur a fee on tuition payments, it could make sense to do so.

For example, let’s say you were interested in the Chase Sapphire Preferred Card and its current sign-up bonus of 60,000 points. You’d earn 60,000 bonus Ultimate Rewards points after you spend $4,000 on purchases within the first three months of account opening.

Based on TPG’s valuations, this offer is worth $1,200. Depending on your spending habits, you may or may not be able to reach this spending threshold on your everyday purchases. Since we’re approaching the new school year — and tuition payments are right around the corner — you may wonder if you should pay with your new Chase Sapphire Preferred to lock in the sign-up bonus and thousands of points on top of that.

If the tuition payment in question is $20,000 and your college charges a 2.6% fee, this would tack on an additional $520 in fees. However, in doing so, you’d earn the 60,000-point offer plus 20,520 points for the purchase itself (at the standard earning rate of 1 point per dollar spent). These 80,520 points are worth $1,610 according to TPG’s valuations — substantially more than covering the $520 fee the college charges.

Once again, this logic only applies if you have no other way to spend the required amount to earn the sign-up bonus. If you can reach that threshold in other (fee-free) ways, you’re much better off doing that and using a different method to pay the tuition that won’t incur a fee.

Earn valuable rewards

Another time you should consider swiping a card for tuition is when the points or miles you’d earn are more valuable than the fees you’ll incur. This is a very gray area since everyone has their own way of valuing the various loyalty currencies out there.

A good place to start is our monthly valuations to get a ballpark of how much you can get out of your points and miles to help you decide the best credit to pay college tuition with. However, keep in mind that these valuations typically apply to redeeming points for maximum value, especially when it comes to transferable point currencies, so the math may not make sense if you redeem your points directly.

The Business Platinum Card® from American Express offers 50% more points on purchases over $5,000 (up to $2 million per calendar year), making it a great candidate for tuition payments. RYAN PATTERSON/THE POINTS GUY

Here are a couple of examples of when the points or miles you’d earn would outweigh the additional fee:

Chase Freedom Unlimited: This card offers 1.5% cash back on all purchases, but if you also hold a “premium” card such as the Chase Sapphire Reserve, you can convert those cash-back earnings into full Ultimate Rewards points. This is the equivalent of earning 1.5 points per dollar spent on every purchase. Since TPG values Ultimate Rewards points at 2 cents apiece, you’re essentially getting a return of 3%. If the percentage fee for using a credit card for tuition is less than this amount, you’ll come out ahead by using the Chase Freedom Unlimited.
The Business Platinum Card® from American Express (see rates and fees): This may seem strange on the surface since the Amex Business Platinum only offers 1 Membership Rewards point per dollar spent. However, it also gives you 50% more points on purchases of $5,000 or more (up to $2 million per calendar year), so if your tuition payment is more than $5,000, you’ll earn 1.5 points per dollar spent. TPG pegs Membership Rewards points at 2 cents apiece, so you’d get a return of 3% on those purchases of $5,000 or more. Again, if the fee for using a card is less than this, go ahead and swipe the card. As always, be sure to adjust these numbers based on your own valuations and evaluate your school’s credit card payment policy to determine whether it makes sense to incur the fee.
Capital One Venture Rewards Credit Card (see rates and fees) and Capital One Venture X Rewards Credit Card (see rates and fees): These cards offer an unlimited 2 miles per dollar on all purchases. So with Capital One Rewards miles valued at 1.85 cents apiece, this is akin to a 3.7% return on all purchases.

As always, adjust these numbers based on your own valuations and evaluate your school’s credit card payment policy to determine whether it makes sense to incur the fee.

Use an introduction annual percentage rate (APR) offer

The final time it makes sense to incur a fee on a credit card for tuition is decidedly less glamorous but nonetheless important.

With the price of higher education so high, many parents aren’t able to cover a full semester’s tuition with cash in the bank or money in a college fund. As a result, financial aid packages have become ubiquitous, with over 80% of college students receiving some form of aid. However, student loans often come with high-interest rates.

This is where a new credit card with an introductory 0% APR (APR) offer can be the best credit card for tuition. These cards will generally allow you an initial “grace period” in which to pay off your purchases with no interest before they become subject to standard rates.

This can be a great option if you’ve exhausted the funds in a 529 college savings plan, don’t want your kids to be saddled with student debt and can finish paying off the entire balance before the promotional period ends. Remember that these purchases are also eligible to earn points or miles.

Once again, I should reiterate that you must be able to pay off the full balance before the promotional period ends. Otherwise, you’ll be subject to an APR much higher than the rate you’d get on just about any loan.

Bottom line

Whether you’re just getting started or are a points and miles expert, you’re hopefully looking for any way to maximize your daily spending through travel rewards credit cards; paying tuition with a credit card is a solid option to earn points and miles.

Around this time of year, these efforts inevitably shift toward college tuition payments. However, individual institutions may charge you for the privilege of swiping your favorite brand of plastic (or may prevent you from doing so entirely). If you incur a fee for using a card, there may be instances where it makes sense, so do your research to determine the best credit card to pay college tuition with. I hope this post has helped illustrate exactly when that’s the case.

Additional reporting by Danyal Ahmed, Ryan Wilcox and Stella Shon.

Featured photo by Justin Lewis for Getty Images.