How to Earn Points and Miles when Paying for College

If you have a high school senior or a college student in your family, you know all about the pain of paying for college. However, to make it a little easier to stomach, there are ways to turn these huge expenses into points and miles.

Let’s look at a few ways to optimize all the college-related expenses, including paying tuition with a credit card and how you can be earning points for rent, groceries, textbooks and other expenses.

Pay College Tuition with a Credit Card

Tuition is probably your largest college expense, and this is a great opportunity to accumulate a huge pile of points and miles if you can use a credit card to pay tuition.

First, check if your college charges a fee for credit card payments. A lot of schools don’t have any fees, but some charge a credit card processing fee of 2.5% to 3%. While some might balk at the fee, there are a few instances where paying the fee might make sense.

Get a New Card with a Large Minimum Spending Requirement

Some of the best credit card offers often have high minimum spending requirements. If you don’t spend a lot on a monthly basis, then spending $15,000 in three months can present a challenge. But if a large tuition bill is on the horizon, this is an excellent opportunity to go after these cards.

Focusing on transferable points, such as Chase Ultimate Rewards or American Express Membership Rewards, will lead to better yields because the points are so versatile and can be used to get some of the best travel experiences.

Let’s look at a couple of examples.

If you are a small business owner, consider opening The Business Platinum Card® from American Express. The welcome bonus varies and tends to be quite high, along with the minimum spend requirement. Having a large tuition bill to pay is a great time to take advantage of this generous offer.

The Amex Business Platinum Card earns 1.5X points on all purchases over $5,000 and on purchases at select retailers on the first two million dollars spent per year. This is another opportunity to supercharge your earnings. Membership Rewards points are extremely valuable, and you can do many fun things with this big warchest of points.  

The Ink Business Preferred® Credit Card is another business card with a good bonus along with a higher minimum spend requirement. This is another great option for a large tuition bill. If you aren’t sure what you can do with the bonus points points, we have a few ideas on how to put these valuable points to great use. 

The Capital One Venture X Rewards Card is another card where paying a tuition bill will help you stay on budget and earn a good stash of points at the same time. Venture miles transfer to Capital One’s travel partners or can be used to “erase” travel purchases. You can do a lot of fun things with a huge pile of Capital One miles.

Earn Spending Bonuses

From time to time, you’ll see temporary spending bonuses. American Express is one of the card issuers that offer these bonuses quite often. For example, the offer could say, “Spend $5,000 in three months and earn an extra 10,000 points.” If you aren’t working on meeting the minimum spending requirements on a new card, this is a great opportunity to bump up your points balance.

Earn Free Nights or Award Milestones and Status

Many cards offer the opportunity to earn free hotel nights when you reach a certain spending threshold.

For example, you can earn a free night at Category 1-4 hotels when you spend $15,000 in a cardmember year with the World of Hyatt Credit Card. You can also earn two additional qualifying night credits toward the next tier status every time you spend $5,000 on your card. This could be useful if you are working toward higher Hyatt hotel status.

The Hilton Honors American Express Surpass® Card comes with a free night award after you spend $15,000 or more during a calendar year. The free night certificates are uncapped, which means you can redeem them at some of the most expensive properties in the world.

Gift of College

The Gift of College gift cards allow you to apply the value of the cards toward a 529 college savings plan or a student loan payment. Before buying the Gift of College gift cards, make sure your 529 plan or student loan is supported. You can do so on the Gift of College website after you create an account.

This is a great way to turn college costs into travel rewards. You can buy these gift cards online or in stores. Unfortunately, physical cards aren’t sold everywhere in the United States, so check if they are available in your area. Because there’s an activation fee, buying the larger denominations would be the most cost-effective as the activation fee is the same across all cards.

The best way to maximize the purchase of the Gift of College gift cards is by buying them at gas stations or grocery stores that earn fuel rewards and use a card that earns a rewards multiplier at grocery stores and gas stations. Also, keep an eye out for 2X to 4X fuel rewards promotions. The fuel rewards you earn will translate to huge savings at the pump.

And while we are talking about the fuel rewards, it’s never too early to teach your student how to use the fuel reward programs to get free or discounted gas.

Pay Tuition Upfront, Then Reimburse Yourself from a 529 Plan

529 plans are a great vehicle for saving for college. Some 529 plans can even be funded with the Gift of College cards purchased with a credit card.

One of the ways of getting the money you saved in a 529 plan is to pay the college directly and then reimburse yourself. Make sure the expenses you are reimbursing yourself for are eligible expenses according to the rules of your 529 plan.

It’s important to keep meticulous records and know the plan’s requirements. Check with your plan administrator about funding and withdrawal options.

Are the Credit Card Fees Worth It?

So if your college charges a fee, is it worth it? Nobody can answer with 100% certainty, but consider the following when you are making your decision:

Can you meet the large minimum spending requirements on the cards with a hefty welcome bonus by other means? Is the welcome bonus worth more than the fee?

Consider the following scenario.

The school charges a 2.5% fee, and you just got the Business Platinum Card® from American Express and need to spend $15,000 to earn the bonus. The welcome offer outsizes the $375 fee you’ll be charged if you were to pay a $15,000 tuition bill. In this scenario, you’ll also earn 1.5X on $15,000, so you’ll end up with 142,000 points worth at least $1,420.

If you don’t want to get a card with a big minimum spending requirement, consider paying tuition with a card that earns bonus points on all purchases. Two excellent no-annual fee cards that earn 2X on all purchases are the Blue Business® Plus Credit Card from American Express and the Citi® Double Cash Card (earns 1% when you buy and 1% when you pay for those purchases).

Buy College Textbooks and Other Necessary Items

College textbooks can be expensive. And what if you need to buy all the stuff that your student needs in their new dorm room or apartment? These inevitable expenses can go toward meeting a minimum spend on a newly opened card.

Don’t forget to check the shopping portals and cash back sites like Top CashBack before you make any purchases.

Maximize Food and Gas Purchases

It’s never too early to teach your student about how they can maximize rewards on their everyday purchases. Send them to college with a card that earns a bonus on groceries, restaurants and gas.

The Citi Premier® Card is an excellent everyday card because it earns 3X ThankYou Points at supermarkets, restaurants and gas stations.

The American Express® Gold Card earns 4X at U.S. supermarkets on up to $25,000 per calendar year (then 1X thereafter) and 4X at restaurants (plus takeout and delivery in the U.S.).

The Chase Freedom Unlimited® earns 3% cash back on dining at restaurants, including takeout and eligible delivery services, and 1.5% back on all other purchases.

The Chase Freedom Flex℠ also earns 3% cash back on dining at restaurants, including takeout and eligible delivery services, 5% back on purchases in rotating bonus categories and 1% on everything else.

If your student isn’t staying in the dorm where all the meals are provided, they’ll probably spend quite a bit in these categories.

Living Expenses

Paying for everyday living expenses is another opportunity to accumulate a good stash of points and miles. You can use a credit card to pay utilities, streaming services and other recurring monthly expenses.

Use a card that earns a multiplier to pay these bills, and you’ll see your rewards balances grow fast. A card like a Citi Double Cash Card that earns 2% cash back (1% when you buy and 1% when you pay for those purchases).

The Chase Ink Business Cash® credit card earns 5% cash back on internet, cable and phone services—all ongoing expenses for many of us.

And before they leave the nest, add the cards you want them to use for everyday expenses to a mobile wallet to use when they don’t have a physical card.

Rent

Rent is often the largest expense, and it could be challenging to find ways to pay rent without incurring high fees. One option is to use a third-party bill payment service, such as Plastiq. You’ll have to do the math if the fees are worth more than the points and miles earned. It might make sense to use this payment method if you are working on a new welcome bonus with high minimum spending requirements. Some landlords and apartments may take cards directly, but expect there to be fees associated with paying with a card.

The new entrant in the world of credit cards, the Bilt Mastercard®, allows fee-free rent payments to participating landlords. The card earns flexible points that can be transferred to a number of valuable travel partners, such as World of Hyatt.

Study Abroad and College Breaks

If your student wants to study abroad, it presents a great opportunity to both earn rewards and teach them how to use points and miles for travel.

First, give your student a card that earns bonus points in the travel category, such as the Chase Sapphire Preferred® Card, which earns 2X on all travel purchases. Chase has a pretty broad definition of travel that includes a lot more purchases compared to other cards.

Don’t forget about the foreign transaction fees and make sure your student has a card that doesn’t charge those pesky fees.

Some of the best credit cards earn bonus rewards in the U.S. only. For example, the American Express® Gold Card earns 4X at U.S. supermarkets only. However, the Citi Premier® Card earns 3X at supermarkets worldwide. Research the bonus categories to make sure they earn extra points abroad too.

And finally, it’s never too early to start learning about points and miles. Start teaching your student not only about the earning aspect but also about the best ways to redeem points and miles for travel. With all the miles earned by paying the tuition bills, they might be able to book a free trip on their own.

Should Your College Student Get Their Own Card?

Should you send your student to college with their own credit card or should they be an authorized user on your cards? There are pros and cons to each, and the two approaches aren’t mutually exclusive.

On the one hand, opening a card in their name is good for building credit history. The student needs to be responsible enough to not abuse credit and have some understanding of financial literacy. Adding a young person as an authorized user on your older cards will give them the benefits of your longer credit history.

Some of the best starter cards include Discover it® Credit Card or one of the Chase Freedom cards. The Chase Freedom Unlimited® card earns 1.5% cash back on all purchases, so you don’t need to worry about rotating categories and using the right card for the right purchase.

If you decide to add your student to your cards as an authorized user, that’s an opportunity to earn more points while helping them establish their credit history while still remaining in charge of their spending.

Don’t forget to take advantage of the bonus points you can earn for adding an authorized user with some issuers, such as American Express.

Final Thoughts

Tuition keeps growing every year, but if you look at the large bill as an opportunity to grow your points and miles balances, it might be easier to swallow. Think creatively about all the expenses your student will incur during their college years and how you can make the most of them by using the right credit cards.

Teaching financial literacy and the importance of using credit responsibly is one of the most valuable lessons young people can learn during their college years. And if they learn how to earn free travel in the process, they’ll turn out to be responsible credit card users for life.