Paying off Tuition: Loans or Through Credit?

Published: April 28, 2015 | Updated: July 30, 2020 | Posted by: Carlo Miguel Castañeda | Personal Finance


Credit Card or Personal Loan
Not everyone invests in a pre-need education plan, and some scholarships require academic achievement. Some may find themselves wondering if there are any other ways to pay for their tuition fee.

Read More: Different Types of Loans Every Borrower Must Know

Tuition fees can be paid through a personal loan or credit cards. Both have their advantages and disadvantages. Let’s take a look at what they are.

Collect 200 (thousand), and go

Personal loans tend to have the advantage of being fully flexible in the terms of the way they can be used. Most are tagged with “multi-purpose loan” meaning that you can use said loan however you want, whether it’s to pay off your tuition fees or for home renovation.

Most banks will provide a set period in which you can pay off the loan, and the interest rate that comes with it. Most of these multi-purpose loans come without a collateral requirement and a minimum or maximum amount that can be borrowed.

For example, EastWest Bank offers a multi-purpose loan that can be paid off in 12, 18, 24 or 36 months. Interest rates for these start at 39.53% (12 Months) and cap at 37.53% (36 Months) for the non-carded or limited card segment.

The advantage of using a personal loan such as this to finance one’s education is that they can borrow a lump sum (as much as PHP 2 Million at EastWest Bank), and pay it off in the intervening months. A disadvantage is that one may have to wait for the loan to be approved and that there is the possibility that you may not qualify for the loan.

Charge it

Everybody hears stories regarding the use of a credit card for large purchases and an education is probably the biggest purchase and investment one can make. One of the none-too-great aspects of using a credit card to pay for tuition is that not all schools accept payment via credit card, most do though nowadays.

One aspect of using a credit card to pay for tuition is that not all schools accept payment via credit card. Certain universities will allow for it to make payment more convenient. Schools like Ateneo de Manila University, University of Santo Tomas, and De La Salle University allow Visa and MasterCard tuition payments. Banks also have tie-ups with schools to allow for installment payments on tuition fees.

CitiBank, in particular, has a Special Installment Plan available to those who use their Citi Card to pay tuition fees.
Their installment plan splits the amount payable in 9, 12, 18 and 24-month periods – at a 0.75% converted factor rate, or a 3 and 6-month period – at a 1.00% converted factor rate.

Other banks that allow this include BDO, BPI, and Metrobank with their own stipulations for payment and these charges to your card still qualify on any rewards facilities that may be applicable to your card.

This means managing your credit card use properly to ensure that the interest doesn’t pile up on the monthly amounts that you pay.

These are two options to paying your (or your child’s) tuition fees through the semester. It always pays to have a contingency plan when it comes to ensuring one’s educational needs. These two gateways also have their own conveniences when properly thought out.

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