The Death of Credit-Card Tuition Payments

As students prepare to go back to school this year, college students and their parents will find more and more that they cannot pay their tuition using credit cards. As the economy has gotten worse, schools have decided that they cannot pay the thousands of dollars in merchant fees associated with accepting credit cards. So, while students can still use their cards for their personal needs and for textbooks, they'll need to find an alternate way for paying tuition.

For some students, dumping the cards altogether is maybe not a bad thing. One report shows that undergraduate students have, on average, more than $2,000 in credit card debt. And in the past, about a quarter of these students used their credit cards for tuition payments. That's a lot of debt racked up from college tuition!

If students and their parents have been using credit cards for tuition payments because they can't afford one lump sum, they might consider running away from the high interest rates of a credit card and instead use an interest-free payment plan, offered by many colleges, in partnership with a monthly payment program like Tuition Management Systems or Sallie Mae's Tuition Pay. These will allow the family to sign up for a five month or ten month payment plan, with an enrollment fee of $30 to $60.