Tuition: Paying With Plastic

His daughter's semester abroad cost Jim Campbell almost $10,000, but by paying the tuition bill with his credit card, he at least got discounts from L.L. Bean.

"I just figured I might as well keep the money for another month and get a few dollars towards a purchase," said Campbell, a psychologist from Wakefield, R.I. He used a credit card issued by the outdoor-wear company to pay the University of Rhode Island, which ran the study-abroad program.

Many students and parents have had the same idea and pressured schools to accept credit cards for big tuition payments. The number of schools accepting MasterCard for tuition rose 20 percent last year, according to the company, and similar growth is expected this year.

But other schools are backing out. The fees they are charged have piled up, and some colleges say payment-by-card is little more than a windfall for frequent fliers.

Credit-card companies and card-issuing banks generally charge schools a fee of somewhere between 1 percent and 2 percent.

The University of Massachusetts at Amherst recently decided not to accept credit-card payment for tuition next year, saying it could not justify the $600,000 in fees it paid last year on payments from about 5,000 students. Students there will still be able to make credit -ard payments as part of an arrangement with an outside cmpany.

Tufts University in Medford was facing fees of $525,000, or 1.83 percent of the $28.7 million in tuition payments that came in by credit card, when it stopped accepting cards for tuition in 1998. Boston University stopped in 1997 and saved $1.5 million per year.

But Paul Bazylak, vice president of new markets at Visa, said using credit cards for tuition is a win-win deal.

Schools get a guaranteed payment quickly, and it also benefits consumers, he said. "Parents are saying, `If I'm paying this high tuition fee, at least I'm getting some benefit because I can fly my son or daughter home for Christmas,"' he said.

Credit cards can also be a convenience, particularly for students at community colleges or schools that cater to adults.

"Students don't have to come into campus and stand in line," said Lynn Winter Gross of the Los Angeles Community College District, whose 120,000 students can register electronically and pay by credit card. "Then they can decide at what speed they want to pay it off."

A number of schools, including Rice and Stanford, have resisted.

Some schools worry that students would use credit cards as a convenient — but extremely expensive — student loan. But experts say there is little evidence of that.

Most students use credit cards for books, CDs, gasoline and the like, said Nina Prikazsky, who conducted a study for Nellie Mae Corp., an education loan company.

But the pressure from parents is working. The University of Washington in Seattle will probably accept cards within two years, even though it will cost the school $1 million, said Ken Haines, manager of student accounts. The University of Florida system began accepting cards again two years ago after a brief hiatus, and Tufts said it may accept them again, too.

The University of Kentucky, which stopped taking credit cards in 1994 during a budget crunch, now accepts them again but charges a $25 fee, as does Kansas State University. The fee would be illegal in some states, including Massachusetts.

Kentucky simply wants to break even, said Linda Bradford, director of student billing services.

"We don't want to make money on it, but we want to offer the services students and parents demand," she said. "The universities are caught in the middle."

Written by Justin Pope
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