Using Credit Cards for Tuition Is Now More Expensive

For many college students in the state of Illinois the price of getting an education has just gone up… again. Private student loans are becoming increasingly difficult because of the poor economy and the tightening of credit forcing more and more students to turn to credit cards to make their tuition payments. There are now colleges and universities in the state of Illinois charging students a fee up to 2.75% when they use credit cards to pay their tuitions.

In the spring of 2008, Northwestern University first instituted their policy of charging a 2.75% convenience fee for undergraduates that charged their tuition payments to a credit card. Of course, when some of the other institutions of higher learning got wind of it they too decided that it was a good idea. The University of Illinois in Champaign, and Harper College in Rolling Meadows quickly followed suit and begin charging a fee for credit card payments.

We can debate the merits of using credit cards to pay for tuition all day long but the fact of the matter is that many students now see that using a credit card to pay for college is their only viable alternative. There is no doubt that using a credit card to pay for tuition is not the best way to go about financing your higher education, yet it is happening more and more every year and this horrible economy is not making things easier on anyone.

The fact of the matter is that students have been relying on credit cards to pay their tuitions more and more every year. It is now estimated that nearly one out of every three undergraduates are using credit cards to at least partially pay their tuition bills. According to Sallie Mae, the student loan company, that number is up 24% from 2004.

And now here is the real problem; 8 out of 10 of those students using credit cards to pay for their tuition fail to pay off the bill in full when it arrives and are then being burdened with revolving finance charges. That is the last thing a college student needs, but unfortunately it is exactly what is happening.

It has been reported that it costs approximately 2% for colleges and universities to process credit card tuition payments. Prior to the economy imploding, all of the schools absorbed the cost of the transaction and did not pass it on to the students. That is quickly changing. In 2007, 26% of colleges nationwide charged a “convenience” fee for using a credit card. That is up from 14% in 2003. And you can bet that that number is headed higher.

There are no policies in place for colleges in the state of Illinois as far as charging credit card fees goes. It is entirely up to the individual college or university to decide if they will charge a fee for using credit cards and if so, how much. De Paul for instance, has been accepting credit card payments for tuition for the past 20 years and has never charged a fee, while the University of Chicago does not accept credit card payments for tuition at all.

So it begs the question, why do some colleges feel it is absolutely necessary to charge a fee for using credit cards when others do not? A spokesman for the University of Illinois stated that they would not be able to afford accepting credit cards if they did not pass along the cost of the fee. Northwestern University states that their “convenience” charge is passed straight to the vendor.

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