Colleges clamp down on credit card tuition payments
Plan on putting that upcoming tuition bill on a credit card? Think again: It could cost you. Many universities now impose additional fees on students and parents who pay by plastic and, in some cases, refuse to accept certain credit cards altogether.
The changes stem from increasing costs to universities in processing credit card transactions. Like merchants, universities and colleges are charged a fee every time a credit card is swiped. That tab can quickly add up.
"When you charge $20,000 or more, the consumer loves it because they get points or miles or some sort of benefit," says Jon Speare, codirector of the Treasury Institute for Higher Education, www.treasuryinstitute.org which offers financial advice to colleges and universities. "But it's a very high fee for the actual school."
That's especially true for larger institutions. At the University of Missouri–Columbia, home to nearly 28,000 students, additional fees on tuition payments by credit card totaled over $2 million annually, prompting changes to payment options. At the beginning of this year, the university and the three other campuses in the system began charging a 2.75 percent convenience charge on any transactions made by MasterCard or Discover.
"We are now able to reallocate that money back to our students," says university spokesman Jon Moore. The school also no longer accepts Visa, which, unlike MasterCard or Discover, would not allow a convenience charge to vary with the payment amount. Others such as Utah State University and Georgia State University have implemented similar policies, declining Visa-branded cards for the same reason.
Still, not all students are affected equally by the new policies. In 2005, just 7 percent of private universities reported charging a convenience fee for tuition payment by credit card, according to a survey by the Treasury Institute. Students at a public university may not be so lucky: Nearly half of such institutions passed on the buck.
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