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Paying college tuition with a credit card: Bad idea

There are several reasons why using a credit

There are several reasons why using a credit card for tuition is a bad idea. Credit: Getty Images/iStockphoto/GeorgeRudy

As students head back to college campuses over the next few weeks, some students and parents will be using credit cards to pay their tuition.

Maybe the youngsters don’t know better, but did mom and dad flunk personal finance 101?

If you listen to financial experts, perhaps they did.

There are several reasons why using a credit card for tuition is a bad idea. “For one thing, the interest rate on your credit card is a lot higher than what you would get borrowing money elsewhere,” says Marshall Armond, CEO of “You also have to make payments right away. With federal school loans, you can defer making payments until you graduate or leave school.” 

When you use credit cards instead of student loans, you lose the ability to take advantage of income-based repayment options and loan forgiveness programs available to people working in government jobs or charities.

Another reason for not using a credit card is because with a high balance, credit scores take a dive.

“If your credit score decreases, getting additional credit could become an issue,” says Rivi Biton, a CPA and attorney with Strategies for Wealth in Jericho.

Furthermore, “You'll be strapped for cash at the most vulnerable time. If you have to make a $300-a-month credit card payment for tuition, that can take out a lot of financial momentum from your budget. You will likely need to get a job, which can distract you from school,” points out Milad Hassibi, director of content for

What’s a smarter strategy?

Armond says federal student loans are a better option than credit cards. “While it may be too late now [for this semester], apply for school grants and scholarships, those would reduce the amount you need to borrow.”

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