The price is not right when using credit cards

Natalie Pillsbury

Some students choose to pay their tuition on credit cards – a risky move with high interest rates.

Credit: Jason Hall

College students are a main target for credit-card companies, and students often mistakenly view credit cards as an easy option when they need money.

When it comes to large expenses, such as college tuition, paying with a credit card can prove a dangerous temptation.

The worst consequence of paying tuition with a credit card is the high finance charges according to Madonna Mosca, sophomore special education major. She opted to use a credit card to pay half of her tuition when she did not receive sufficient financial aid.

Mosca said that the amount she charged on her credit card became a burden because she had to begin meeting the high monthly payments immediately.

“Financial aid is better because you don’t have to pay right now,” Mosca said. “I wouldn’t advise using a credit card.”

Using a credit card to help cover some portion of expenses is a reasonable option, said Sara Lynn Charleston, manager of student accounts receivable in the Bursar’s Office.

Paying tuition on credit alone is not recommended, however.

“With interest on a credit card being as high as 18 to 20 percent, you only get further behind,” Charleston said. “The bonus miles or whatever you think you’re going to get from using a credit card can’t possibly be worth it. You just can’t travel that much.”

Students who pay tuition by calling the Bursar’s Office are only able to pay by credit card. Because this method is so limited, it should be the last alternative.

The best option for tuition payment is through Web for Students, Charleston said.

“You shouldn’t wait until the last minute, but (Web for Students) is the best means if you want to pay by check,” she said.

Loans, however, are the optimum choice for paying tuition.

Federal loans have a better interest rate than credit cards. In some cases, students can qualify to have the federal government pick up interest costs that accrue while the student is in school.

Students can opt to pay interest charges while they don’t have to make payments on the loan itself. This prevents having to pay interest on interest.

“The best time to apply for financial aid is in February,” Charleston said. “While it is never too late to apply, it can be too late for certain types of aid. Federal loans are the exception because they continue to be available.”

If tuition is not fully covered by federal loans, there are still options such as alternative loans, which are better than credit, Charleston said.

Alternative loans are funded through private lenders and can provide a backup to federal loans.

If a student has already used a credit card to pay tuition, there are ways to avoid high finance charges.

“They can reimburse themselves by applying for financial aid in order to pay down credit card debt,” Charleston said. “It’s important to make sure you use the aid only toward educational costs. It can’t be used to pay off charges on clothes.”

Students are strongly encouraged to have documentation that proves how they use their loans.

“Plan early — overplan — that way if you don’t need as much funding as you receive, you can always reduce your loan,” Charleston said. “It is hard sometimes for new students because they have no idea how much everything will cost. It’s best to put yourself in as good a position as possible.

Contact general assignment reporter Natalie Pillsbury at [email protected].