Colleges decline credit card tuition payments
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"It's better for families who are used to paying a mortgage or car payment on a monthly schedule," says Nina Vellayan, president of the business office solutions group at Sallie Mae, which offers monthly payment plans as well as other loans and scholarships. "It's easier for them to budget and there's no interest at all."

If families need to wait until after graduation to pay for tuition, federal loans have interest rates as low as 5 percent and have more flexible payment terms than private loans, which are offered by independent institutions, including universities. Most students combine these with grants and scholarships they have received.

Some schools also offer short-term choices so students won't have to resort to plastic. "Students can pay 30 bucks to take out enough money for the quarter if they're worried their financial-aid package won't be fully disbursed in time," says Johnston. "They can have 90 days interest-free. It's a lower-cost option than using a credit card."

The school also offers free money-management classes for students to help them understand their options and steer them away from driving up their debt.
           
"We want them to understand the importance of credit scores and the value in building their credit," says Johnston. "There are more important things than frequent-flier miles. They need to learn how to budget to stay out of the hole."

Cara Nissman is a freelance writer in West Palm Beach, Fla.