I didn’t use a credit card to pay my college tuition, but I think students and their parents should have the flexibility to make payments in whatever way works best for them.
If a family wants to rack up reward points or break up a big tuition payment into smaller pieces over time with a card, why shouldn’t they? Or if a student needs to cover a $500 college bill until a loan is processed, why should she be charged an extra 2.62 percent for using plastic to pay the bill on time instead of accumulating late fees — and potentially dropped classes — by waiting for the loan?
In a time when you can use a credit card to pay for pretty much anything, it seems odd that the majority of U.S. colleges apply numerous restrictions and fees to students who’d like to use plastic to pay their tuition bills.
While conducting a survey of 300 higher education institution’s credit card payment policies for a story I wrote for CreditCards.com (See “2014 Credit Card Tuition payment Survey“), I learned there are many factors that play into whether colleges and universities accept credit card tuition payments and what fees they charge for accepting them. But, at the end of the day, it seemed to me that schools can do more to provide convenient payment options at a lower price.
Too many variations
The survey revealed that community colleges are by far the most credit-card-friendly when it comes to tuition payments (all 100 surveyed community colleges accept cards). These institutions also don’t typically charge a “convenience” fee for doing so (only 12 of the surveyed actually do), compared to the average pay-by-card fee of 2.62 percent charged by the majority of public and private colleges.
Plus, private and public colleges’ card-payment policies are all over the map. Only 23 out of 200 four-year institutions surveyed accept credit card payments for undergraduate tuition bills that are free of fees and restrictions. Of those that accept cards with fees and restrictions, many say the cost of processing card payments and varying state laws make it hard to be credit-friendly. But then why are those 23 four-year schools able to make it work as well as community colleges? I figured schools of the same size and area would have similar policies, but that’s not what I found.
For example, the University of North Carolina at Charlotte accepts card payments with no additional fee, but the other three North Carolina public colleges surveyed charge at least a 2 percent fee — and the fees vary. California, New York, Texas, Michigan and Wisconsin also have varying state school card payment policies, to name just a few. Private colleges were no different.
How are some schools able to absorb credit card processing costs while others of similar stature (LeHigh University, Boston University and University of California Santa Clara, among others) charge a convenience fee and/or allow only part-time, graduate or summer session students to pay with a card? It seems as if some schools have made providing a variety of payment options to their students and parents a priority while others have not.
Until a couple years ago, Visa’s higher education payment fee policy only allowed schools to charge a flat-rate fee regardless of the total tuition payment amount while the other card networks allowed schools to pass along a percentage-based fee to payees. As a result, many universities, including my own alma mater (University of Wisconsin Oshkosh), stopped accepting Visa cards or used the complication as a reason to not accept card payments at all.
All this changed when The Visa Government and Higher Education Program was implemented in November 2012, which allows schools to charge the same convenience fee — flat-fee or a variable percent — for all card tuition payments, regardless of the card network used. However, a number of schools still don’t accept Visa payments (31 of 260 card-accepting schools surveyed) and some of those institutions, such as Michigan State University and the University of Central Florida, cite Visa’s old fee policy as the primary reason for not accepting Visa payments.
I also wondered why there is such a wide range of card payment fees (from a low of 1.64 to 2.99 percent) among the schools I surveyed. Some of them say it has to do with third-party payment processors. By using these processors to accept online credit card tuition payments, colleges and universities say they are alleviating costs and reducing processing responsibilities, but is that true?
Western Kentucky University’s bursar Belinda Higginbotham said WKU has nothing to do with the 2.99 percent convenience fee rate set by the third-party processor the school has worked with for nearly 10 years.
However, Neil Vickers, vice president of finance at Austin Community College, said his school regularly negotiates its credit card processing rate, which is now down to almost 1.5 percent.
While a public university and community college are very different entities, they are still both card accepting merchants. Their card processing fees beg the question: Have schools tried to negotiate better, more affordable card processing rates, or are they just charging the same fee year after year?
Our credit card tuition payment survey answered many questions I had about credit card payments at U.S. colleges and universities, but I’m left wondering just how willing schools are to re-vamp payment policies with students’ and parents’ best interests in mind. Can more be done to make paying for college cheaper and more convenient for those who favor credit, and not just at select schools?