Students and parents looking to reap the benefits of paying tuition by credit cards - such as low interest rates and frequent flier and cash-back perks - will have to keep their cards in their wallets, for now.
Though Tufts is exploring ways of accepting electronic payment, University officials say the fees from accommodating credit card use are too high to bring back the program. The Board of Trustees voted in 1998 to stop accepting credit card payments, according to Bursar Kathy Mundhenk, who has worked at Tufts for two-and-half years.
Tufts must pay a certain percentage of every dollar that each parent pays by credit card as a fee to the credit card company. When credit-card tuition payments were discontinued, Tufts was receiving $28.7 million in tuition payments by credit card, and paying over half a million dollars in fees. According to officials, Tufts could not absorb the cost without drastically raising tuition.
Massachusetts law prohibits Tufts from making credit card users pay a surcharge to cover the fees, according to Mundhenk. But one legal option would be to charge a "convenience fee" for those who pay by credit card.
One reason schools accept credit cards is the ease in processing the payment electronically. Boston College (BC) has a system that processes the payments over the phone using voice prompts, according to Christopher Cordella, director of operations and student services at BC.
BC began accepting credit cards five years ago. "The only real drawback is the cost" Cordella said. "If it starts to impact tuition, we'll need to stop."
Tufts and Boston University (BU) have used similar systems for credit card transactions. "Schools look to try to develop electronic processes... back in those days [accepting credit cards] was the only choice," Mundhenk said.
Each semester, the Board of Trustees at Tufts various schools evaluates payment methods. Whether to accept credit card payments is one of the many topics discussed, but for right now, Tufts is unlikely to change its policy. "The University would like to move toward electronic processes but not at such a great cost to the school," Mundhenk said.
Schools are looking to other, cheaper ways to use technology to speed processing, like automated clearing house (ACH) payments that are done over the Internet, an option being explored at BC.
Many parents use credit card tuition payments to accumulate frequent flier miles and related perks. But as more undergraduates take advantage of the option, the fees schools must pay rise. "I probably would charge tuition fees if that were an option so that I could earn frequent flier miles," said Dave Ardam, whose son, Jackie Ardam, is a freshman.
Robert Crowell said he would jump at the opportunity to use a credit card to pay for his the tuition bills for his freshman daughter, Sarah. "Absolutely, because you get frequent flier miles" he said.
Credit card tuition payments are also helpful to parents who, according to Cordella, "don't plan as well as others." Charging a tuition payment is easier than taking money from the stock market and cheaper than paying stock penalties. It delays payment for another 30 days, giving more time to those short on funds.
Four years ago, before BU eliminated the credit card payment option, Singer talked with companies about possibly reducing the fees. Visa agreed to make colleges a separate group with a lower fee percentage. But the reductions were not sufficient to convince BU and other schools to continue accepting credit card payments. "I can understand why the University would be opposed to this method of payment," Ardam said. "It might ultimately end up raising tuition prices."
There are still opportunities for parents to use their credit cards. Summer courses at Tufts can be charged, and part-time students at BU can also pay with credit cards.
Area schools are also searching for a way to make payments easier for graduate and part- time students. "We found that part-time students have limited options in the way of loans and scholarships," said Steven Singer, the BU comptroller.
Credit cards could act as a loan for these students. But schools find that parents of undergraduates benefit from the credit card payment option more often than graduate or part-time students.
Tufts isn't the only school that stopped accepting credit card payments. Singer said that "the costs were getting so very excessive" that BU stopped accepting credit card payments in 1997. Fees to the credit card companies had cost the school $1.5 million per year. With the rise in tuition fees and credit card fees, that figure today would be closer to $2.5 million.
