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More students paying for tuition with plastic
Debt could mount without careful planning
By Chase Harvey
“The university does not provide any incentive to any student for paying their tuition no matter what method of payment they are using.”
– Edward Nieskes, assistant controller
More University of Wisconsin-Milwaukee students are using credit cards to pay for tuition, records show, potentially throwing those students further into debt.
As colleges have increasingly allowed tuition payment by credit card, more students are opening up their wallets and charging tuition for the future.
“I did it (paid for tuition with a credit card), really, just out of convenience,” said Joshua Hanson, a UWM sophomore.
In October 2003, the first month UWM accepted credit card payments for tuition, only 151 total transactions were recorded. At the start of the next semester in January 2004, 1,296 transactions were recorded.
From July to November 2004, a total of 3,095 transactions were recorded. In that time, spanning both the summer and fall semesters, the number of transactions recorded had more than doubled since January 2004.
But because UWM, which only accepts MasterCard and American Express, does not keep any records of unique transactions, defined as those by one person, the numbers of transactions may include transactions in which a student paid for tuition multiple times.
“The university does not provide any incentive to any student for paying their tuition no matter what method of payment they are using,” Business and Financial Services Assistant Controller Edward Nieskes wrote in an e-mail. “The students may see an advantage to paying their tuition online because the transaction is posted automatically to their account when they finish the transaction and they can do it at their convenience and avoid waiting in line or mailing in a check.”
According to a survey of the 2003 fiscal year conducted by the National Association of College and University Business Officers, colleges or universities that negotiated fees with credit card companies were less likely to have higher costs per dollar collected.
“I haven’t encountered any problems,” Hanson said. “I’m close to maxing out the card — that’s the only thing I think would worry people, or give them problems.”
Other students said that credit cards can be an important option when paying for tuition.
“I was going to have a hard time paying for my last semester so instead of going to a bank or getting student loans I just charged it,” said Evan Thom, a spring 2005 UWM graduate.
“That’s a lot of money to put on a credit card — I know people who don’t even have a high enough limit for that,” Thom said.
In a March 13 Boston College Chronicle article, Boston College administrators disallowed paying for tuition with credit cards because of credit card transaction fees. Because of the fees, some colleges and universities have to pay millions of dollars because of a high volume of transactions.
In response, some colleges and universities have charged fees for students who use credit cards to pay tuition.
According to the NACUBO survey, colleges and universities have offset the costs associated with accepting credit cards for tuition and fee payments. Although only 31 colleges and universities indicated the amount of the fee that they charged as either a flat fee or a percentage rate for processing a credit card transaction — about 2 percent — 58 indicated that they charged some fee.
The survey said that some colleges and universities would continue to offer tuition payment via credit card, but would encourage alternative payment methods, such as electronic checks.
Even though students are increasingly making tuition payments with a credit card, UWM students said that they remain hopeful that those payments will be paid off quickly.
“I was only able to pay some of it off during fall semester, but I have a ‘grown-up’ job lined up after graduation so I’ll be able to pay the rest off rather quickly,” Thom said.
“I’ve got a part-time job, and I’ll work over winter break,” Hanson said. “After that I’ll have close to enough to pay off tuition for next semester. Hopefully, I can continue to work like that, and maybe I won’t have too much debt when I do graduate.”
According to Nellie Mae, a leading provider of higher education loans, a study of last year's student loan applicants showed that students held an average of three separate credit cards, 78 percent of students had at least one credit card, 32 percent of students had four or more credit cards, and 95 percent of graduate students carried credit cards.
Students said that one concern about using credit cards to pay tuition is financial management.
“I am a little concerned that some major credit card companies are targeting a younger audience who may already have problems with debt from college loans and tuition,” Thom said. “It can be tricky when you’re just starting to learn how to manage your own finances.”
Capital One has a college financial education program for students called MoneyWi$e University, which aims to promote financial education and teach responsible spending and basic money management skills to college-age students. All of the major credit card companies have similar programs set up to educate students about credit card use.
MoneyWi$e University is designed to help students recognize the importance of handling their money wisely, learn and understand basic money management skills, evaluate their personal spending habits, develop their own money-management goals, and learn to spot signs of potential financial trouble.
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