BYU’s Unfortunate Change for 2006

My wife just received a letter from BYU stating that, starting in 2006, BYU will no longer accept VISA for tuition, fees, insurance premiums, and loans. American Express, Discover, and MasterCard usage will now require a 2.75 percent service charge. In true Mormon superlative speech, let me just say that this is the dumbest thing in the world.

The letter explains that the University and “its sponsoring Church” will save more than $1 million annually. The letter also suggests that families using credit cards to finance tuition costs should contact the University for other less-costly options. And then, get this, the letter says, “In addition to the significant cost savings, BYU is now able to provide a free electronic check option and a number of enhanced features making internet payments safer and more convenient.”

So let me get this straight, something that wasn’t free in the past is free now because a bunch of money isn’t being spent somewhere else. So wait, how much is the Church saving again? Surely not all of the “more than $1 million” if it is only because of this savings that some other undefined expense is now free to all students. And how exactly can these new services be “in addition to” rather than “because of” cost savings? Hmm…

I have three reasons why I think this is a bad idea, some potentially specific to me and others more universal:

1) As the world moves toward flexibility and convenience with money (in a good way is what I mean, not in the overused-in-General-Conference bad way), BYU decides to be less accommodating to its students while hiding behind “Church savings.” From a business standpoint, this can be a big faux pas. If, as a company or organization, you need to save money, you have big problems if the not-accepting-credit-card-payments option is what you come up with. It’s just better for a price increase to happen with value and/or services staying the same (or improving) rather than the price staying the same and value and/or services being taken away. You can almost always raise prices. But don’t mess with taking away something a consumer has already valued! BYU has chosen the first option every year anyway, so why the sudden change? Speculation time: Is there a bigger message? Are credit cards evil? Should we destroy the fire that we can’t control?

2) I have flown to Eastern Europe a couple of times free of charge because of airline points which I have earned via credit cards. Many of these points have come from tuition payments charged throughout the past few years (none of which accrued any interest, why is it that any talk of credit cards is followed by interest and poorly chosen financing? Am I the only one who uses credit cards for practically everything while paying no interest?). I know this is probably my weakest point, but I was seriously looking forward to the Hilton points we were going to earn in January from my wife’s last semester tuition (we’re so close to the week-free package in Hawaii).

3) While the above is a perk that I and many others could live without, a more serious issue not addressed in the letter was that of tuition reimbursements. I’m talking of employer sponsored programs, which help finance many students’ education. I, for one, have worked for an employer for the past five years that has given me $1,500 toward tuition twice a year. The reason BYU’s change is a problem is because, as the name implies, a reimbursement comes after a payment. So students who need to make a payment before receiving a reimbursement will have to pay the 2.75 percent charge or somehow come up with thousands of dollars in their checking account temporarily.

While I’m all for the Church saving money, if we were to have a post called “The Top Ten Ways The Church Could Save Money,” would this change make the list? Not in my book.

Comments

  1. Bob,

    You probably don’t want to hear this right after getting the bad news, but here goes:

    On point 1, they have raised the price, just as you suggested. As you noted, if you wish to pay by Visa, there will be a 2.75% fee. Ideally, this fee is correlated somehow with the fee BYU pays to the credit people.

    On point 2, the airline value you get is probably not as expensive as the fees BYU is paying the credit card company. In other words, the airline program probably works by giving you back some of what they charged BYU. BYU has now cut out the middle man, so they can not raise tuition as fast. This may not be a net benefit for you as a credit card user, because some of these tuition benefits accrue to students not using credit cards. But from a social perspective it isn’t clear why you should be given free trips to Europe on BYU’s tab just for using a credit card. On the other hand, maybe BYU gets a great deal from the credit card companies and you guys are getting more out of it than BYU pays. You still have the issue of why BYU should give this to you when those without credit cards get nothing. Of course, if it really is a deal, everybody should use the credit cards…

    On point 3, that is certainly true. Students who do not have the cash now will have to pay some fee (like 2.75%– or about $40) for the short term loan until they get reimbursed. Before, BYU and/or the credit card company were giving you that loan for one free month. On the other hand, students with jobs who reimburse their college expenses, yet don’t have $1500 in savings to float this loan, are a pretty small group and perhaps not the most financially vulnerable to begin with. Crummy jobs usually don’t pay for college, after all!

  2. Bob Caswell says:

    Ah, Frank, good to see your reply… Now for the reply to the reply:

    1) I must have not made it very clear, but Visa actually can not be used at all at this point (you know, the most common credit card). The letter, of course, has a perfectly good explanation: “Visa is not accepted because Visa chooses not to participate in these [third party programs forcing consumers to pay credit card service charges] programs.”

    And as far as your emphasis on raising the price… Raise it some more! Don’t force thousands of students to micromanage something that should be BYU’s responsibility as an accommodating institution. Geez, what’s next, registration only by phone because, though the world uses the Internet, we’ve decided it to be too costly?

    2) Frank, I thought you were a capitalist. What’s all this talk of “…why BYU should give this to you when those without credit cards get nothing.” It’s not just BYU giving it to me; it’s the whole American financial system. Do I really need to explain to you why taking advantage of services offered by financial institutions is a good thing? And why affirmative action for credit card benefits is a really bad idea?

    3) You make the “about $40″ seem so little. The first problem is in assuming that these students have a credit card other than Visa (again, the most common credit card, especially among students). The idea of many students filling out paperwork for a short term loan or credit card that they don’t have (leaving the fee aside) is a huge waste of time and very inefficient.

    And I have to reply to this: “…with jobs who reimburse their college expenses, yet don’t have $1500 in savings to float this loan, are a pretty small group…” I think this takes the cake for assumption of the day. I’m not sure how employment that reimburses college expenses some how turns into $1500 in savings. This benefit is actually quite popular in the area and in no way suggests some sort of financial stability on the part of students involved (many companies in the area offer this program while still paying less than $10 per hour. Oh and let’s not forget that BYU likes to cap the amount of work one can have while going to school: 20 hrs. per week). But this shouldn’t get in the way of students having $1500 in savings, no, especially not around Christmas time when travel and other expenses are very high…

    Bottom line: I stand unmoved. This was a bad idea on BYU’s part.

  3. Bob,

    If you want to get the bonus, then pay the fee! Isn’t this the same result as your proposed solution of raising the price?

    When I was at BYU i paid with my credit card for everything (except tuition), books, rent (oncampus housing), everything. and I got cash back. Why? It was an option that BYU allowed. Was I costing them money, sure. But I wouldn’t have griped had they taken away the option, because that is there decision. Rather than raising tuition and fees for everyone, they increase fees for only those who force them to incur the expense. Net gain for everyone.

    And how is this a bad idea on BYU’s part? Bad for whom? BYU – they save money and still offer the same service (education). Students – well most get a lower tuition. Students who put expenses on credit cards generally come from one of two camps 1) those like you and I who had the cash, but wanted the points or freq flier miles 2) those who didn’t have the cash and were financing through credit cards.

    With group 2, this change will hopefully be an encouragement to get by on student loans alone (at 2-4% interest and tax deductible) vs. credit cards (10-15%interest and not tax deductible). A bit heavy handed maybe, but I’m ok with it in light of the cost savings.

    With group 1 it is tough to feel sorry for us. Sure we don’t get the trip to hawaii this year, or the other savings, but why should BYU and other students have to pay for this benefit? Especially when it costs them more?

    The significant benefit lost by not accepting credit cards, immediate payment from parents in case of emergency, has still been maintained through the check by phone option (which is significantly less expensive and simpler than credit cards).

  4. This may be a bad idea, but I am not sure it is BYU’s fault. Sounds like something Visa decided to change (at least to me.)

  5. Bob Caswell says:

    I will probably pay the fee, as the points are worth it to me at this point. But all this talk about how it’s better this way and a net gain, etc. has me a little puzzled in that I wonder why the rest of the financial world (other universities included) don’t do it. I think the answer lies in the fact that BYU has more power and authority over those for whom it provides services. If charging consumers (at retail locations, universities, wherever) the credit card fee was the better option because it truly is a “net gain,” then it would follow that we’d see it a whole lot more, don’t you think?

    This post was just as much about how BYU can hide behind the Church and get away with practically anything as it was about anything else. The rest of the world wouldn’t stand around saying, “I can see how that could hurt me, but I’m ok with it.” They’d simply go somewhere else. But BYU has such an enormous following that being accommodating to its students is at the bottom of the list.

  6. Bob, it seems you are not aware of this, but Visa charges BYU a fee of 2.75% on each payment. It’s not some abstract “financial institution” that is footing the bill. When you paid by credit card instead of check, you were costing the university 2.75% of your tuition in exchange for some airline miles.

    The only change is that now, BYU wants students to be aware that their choice of payment method has implications (since many people are unaware of the fees charged to businesses by the credit card companies). If you want to pay by credit card, then you should be responsible for the fees incurred. Visa doesn’t want to allow that, since it obviously discourages use of the credit card, so as a general policy they won’t go along with it.

    When students don’t bear the cost of credit card fees, the students who pay by check are effectively subsidizing those who pay by credit card, since the price for everyone will need to go up to cover the fees caused by some.

    Your “free” airline miles were at the expense of the university and check-paying students. Visa could afford to pay for your plane ticket because they were taking 2.75% of your tuition out of your payment to BYU.

    I’m all in favor of making people pay the true cost of their own transaction fees.

  7. Bob Caswell says:

    So Jonathan, where is the line drawn? If we should pay for the cost of all fees associated with our particular circumstances, then should my tuition differ from yours based on the differences in expense incurred by our different departments? Why does the Church have all missionaries pay the same amount regardless of whether or not they serve in Paris, France or Paris, Idaho?

    Also, another thing to note that hasn’t been emphasized, if the University is truly saving over a million dollars on this, then that just proves just how many people are going to be impacted. Do the math. If over 20,000 students have been paying via credit card (the MAJORITY) for their own reasons and now have to change, that’s not somewhere to make a change thinking little impact will happen… Unless, of course, you can, banking on that same majority not saying anything because it’s “the Church” after all…

  8. Bob, grow up. I have never heard of any other college accepting credit cards for tuition payments. The university I attended cost nearly 10x as much as BYU, and only took checks or e-checks as payment. Why should the University subsidize credit card payments so you can get reward points? I would be surprised if many universities offered this service in the first place, so I doubt BYU is cutting a service that everyone else provides. It seems the real reason you are upset is that you are going to lose some reward points.

    Furthermore, credit card reward points are generally understood to be worth about 1%. So if you are going to pay a 2.75% fee to get 1% worth of rewards, that just doesnt make much sense.

    BYU is among the best educational values out there. It is not their job to make your life as convenient as possible. You are already getting a great deal with the cheap tuition they charge. I think most people would happily give up credit card payments in order to keep tuition costs down (or keep them from rising as fast).

  9. Bob you stated:
    If charging consumers (at retail locations, universities, wherever) the credit card fee was the better option because it truly is a “net gain,” then it would follow that we’d see it a whole lot more, don’t you think?

    No, because of the easily replaceable nature of most goods and services. Around the corner from my house are two fast food places. Both are burger places, one charges 1.50 atm fee the other accepts all cards without a fee. Since I don’t usually carry cash where do I go? Unless I have ahuge hankering for burger place no1 i go to the place that accepts cards. Its a marketing incentive. It is also an incentive to get the consumer to spend more. Studies have shown that the avg transaction with a CC is significantly higher than cash payers. If i have cash I might not order the combo meal, or might just get it regular sized. CC, biggie size it! So by accepting CC with no fee business two got me to spend money and spend more money than if I paid with cash, even though they have to pay a fee.

    BYU is not quite the same, because as a non profit organization it has different goals and restraints. And as far as attracting students I can’t imagine many students make an educational choice on who accepts credit cards (though there may be a few).

    as far as your mission analogy, it goes to fairness. Each missionary should get the same benefit out of serving a mission (spiritually speaking not included). You get room, board and what you need to maintain yourself while abroad. Where you go is random/guided by the spirit. The ability to pay should not be considered. If there was choice involved maybe it would be fair to pay different. Also having the costs equalized makes it fairly easy for a family to plan for the expense of a mission. Unlike in the old days where your mission costs could vary wildly.

    As far as “hiding behind the church”, I don’t think that is a fair analysis. The church pays for a signifcant portion of BYU expenses, it has a duty to the church. When I say “it hurts me, but I am ok with it” it is because I realize that my small sacrifice increases the greater good. I am not totally selfless, but I try not to kick against the pricks. Your points that were accumulating came out of somebodies pocket. I don’t think the majority of students paid with a credit card. Even if they did, they may be willing to give up willingly. By discontinuing cc usage without a fee, they essentially prevent raising tuition!

    As far as true costing the expense of each student? That seems like an interesting idea, but a little difficult to implement how would each cost be determined? Do alumni contributions come in (some depts, say business and law, have significant contributions that defray costs, so do they get lower tuition?), do you count the days each is in class? Time spent in the library? It seems like it would be difficult to implement this. Also this would serve as a detterrent to one of the goals of the university, that being to get a diverse education.

    Besides to a certain extent some classes allready do this (lab fees, materials fees etc)

    And as far as tuition reimbursement goes, thats why we have student loans, to pay for tuition!

  10. Add me to the list of people who are amused by this conversation. This simply isn’t a problem at a lot of universities. Few people have good enough credit to put $20,000 on a credit card in one transaction, and few universities would be willing to lose over 2% of its tuition to credit card fees.

    There are plenty of good reasons to hate BYU, Bob, but this just isn’t one of them.

  11. I think Bob knows his credit card bonus points argument is a weak one in support of his criticism of BYU’s new policy. He was just annoyed because it seems directly pointed at him.

    The thing that bugs me most is the suggestion that the Church is trying to discourage credit card use for students’ own good. Another way to wag their finger at people who use credit cards, since they can’t be trusted to do so responsibly.

    If that isn’t the reason, why not raise the tuition for everyone to recover the costs? Frank is right that BYU is raising the costs, but since this way they only do it for credit card users, it sounds like an intentional disincentive to me. My guess is that it’s designed to be a social disincentive more than an economic one.

  12. People who use debit are dumb. Keep your money longer and earn interest on it. Use credit for everything. Pay credit bill on time. You make money.

  13. Logan,

    The correct way to think about it is that they are removing an incentive that cost them money. Under the old system, they were effectively encouraging credit cards and paying for the result. This is no more.

    Bob,

    I think most of the points I made have been made as well or beter by others here.

    I am saying that under the old system, BYU is implicitly paying to encourage credit cards. Now they have stopped and they let the individual face the cost. This is efficient, meaning it is a net gain for society. And I’m a lousy capitalist, but I’m a pretty good economist. BYU paying 2.75% in order for you to get 1% is a lousy deal for everybody but Visa.

    As for Visa vs. not, it sounds like your argument is with Visa, not BYU. They are the ones with the monopolistic trade restriction. Costco also does not accept Visa, but I still get a better deal there and love to go.

    And no, I don’t think there are that many BYU students who have tuition payed by work but lack the resources to float the loan for a month. But maybe we are arguing about how many “that many” is.

  14. Frank, you’re obviously a better economist than I, but on the margin aren’t the two the same? Removing an incentive has the same marginal effect for tuition payers as introducing a disincentive.

    You do have a point with your welfare argument, though.

  15. John Mansfield says:

    There are businesses that don’t take credit cards. Good, cheap restaurants often don’t. There is a gas station in my area that consistently has the lowest prices that doesn’t take them either. I suspect large chains have some negotiating power with the credit card companies, but for small independent operations, a big chunk of the profits are lost from every credit sale.

  16. Bob Caswell says:

    The National Association of College and University Business Officers recently conducted a study on universities and colleges accepting credit cards for tuition. More than 80 percent of the 495 that responded accept credit cards for tuition. The study also emphasizes that institutions that charge under $5,000 are more likely to accept credit cards (94 percent of them do), though the majority of even those that charge more than $25,000 also accept them.

    The study also explains that “customer convenience” is the most common reason for these institutions to accept credit cards for tuition, though increased efficiency and reduced cost due to faster payment also made the list. Also, only 12 percent of the schools charge a fee to students for this service.

    This is just some food for thought in response to all the comments assuming that this is a novelty among universities and that convenience toward students is somehow an anomaly among schools. For those interested, check out the study:

    http://www.nacubo.org/x3816.xml

    Oh and by the way, in my case (which isn’t worth explaining), I’ll be getting more value from paying the $40 to use a credit card to get points, otherwise I wouldn’t be doing it! But for the umpteenth time, that is the most inconsequential part of my post, though the easiest to respond to… As hard as it is to believe, I’m actually more concerned about the negative effects this will have on other people.

    And Frank, as far as “…BYU students who have tuition paid by work but lack the resources to float the loan for a month.” I personally know 15 people in this exact situation and could probably come up with a few hundred more… But I agree that this number may mean more to me than it does to you, as I used to be one of those people.

    But let’s not forget that the majority of students till now have paid via credit card at BYU (which is much higher than the 18 percent average [volume using CCs / total volume] mentioned in the study above making it even more bizarre for BYU to save money by cutting convenience from the majority of its students)… Assuming people pay using the option that makes the most sense to them, BYU is affecting thousands of students negatively, not just the few hundred I could come up with.

    And yes, Ned, though you were wrong about the “few universities…willing to lose over 2%,” I agree that there are plenty of good reasons to hate BYU. This one just happened to be the straw that broke my camel’s back.

  17. Bob Caswell says:

    “…but for small independent operations, a big chunk of the profits are lost from every credit sale.”

    I’ve done case studies on companies losing profits by not using credit cards because of their horrendous, inefficient accounts receivable departments mixed in with the loss from figuring out the time value of money associated with all the transactions that aren’t automated and nearly instantaneous. But for a pizza shop that doesn’t have to deal with A/R (half the time those smaller places don’t even accept checks), I agree that it wouldn’t make sense to accept credit cards.

  18. Bob-

    How about looking at it like this:

    All universities must raise tuition from time to time to cover increases in expenses. BYU has been forced to increase its tuition by 2.75% for all students to provide the quantity and quality of services they want to provide.

    However, knowing that many students want to save money wherever they can, BYU is giving the option for students to get a discount for paying cash. The discount is 2.75%, which reflects the transaction fees saved by not using a credit card.

    Under this scheme, BYU gets the same tuition revenue that they would if everybody paid by credit card. However, they are giving the option for students to save money if they choose.

    How is this unfair? From an economic point of view, the situation described above is exactly what BYU is doing. Instead of looking at it as a credit card tax, look at it as a cash discount. Since the credit card fee is effectively a waste of money, it makes sense to shift the incentive to pay cash to the one who chooses the method of payment.

  19. Interesting, I didn’t know so many universities take credit cards. Certainly the Ivies and other “elite” 4-year colleges don’t.

    I still have a really hard time believing you know “hundreds” of students who have jobs that are good enough to provide tuition reimbursement benefits, but who can’t afford $40 once a semester to float a loan for a month.

  20. Bob Caswell says:

    Jonathan-

    I think we’re getting closer to bridging the gap between us. I see where you are going here… However, when you say, “…knowing that many students want to save money wherever they can, BYU is giving the option for students to get a discount for paying cash.” This only works if it were truly an option. I’m referring to the fact that by BYU using third-party institutions to process credit cards, VISA is no longer accepted period. Now, I know this is not BYU’s fault from the standpoint that BYU does not control VISA’s decision to participate in such programs. But it is BYU’s fault in that they decided to make the plunge with full knowledge that VISA would no longer be accepted at all. We don’t have statistical data that tells us what percent of the already established majority credit-card-tuition-paying student body uses VISA. But I don’t think it illogical to assume that VISA was probably the most widely used card in tuition payments from these 20,000+ students, as they are, you know, students, people who are less likely to have a wallet full of various credit cards beyond the most standard: VISA. Though, this is a unique bunch in that they recognize the value of a credit card in this situation, as again, the majority uses it.

    And economics hates inefficiencies as well as the opportunity costs associated with thousands of students filling out paperwork for new credit cards so as to truly have their “option” not to mention the undefined costs associated with additional university personnel being assigned to process much of what was automated in the past. And I’m sure there’s a significant upfront fixed cost in addition to these undefined variable costs, etc. You get the idea. We’re not talking about just two variables here. This is one reason perhaps why, I think, it actually could be a net benefit for universities to use credit cards, especially when combined with the “customer convenience” aspect (and hence, why more than 80 percent of them do use credit cards, as per the study).

    woodboy,

    Thanks for being patient with me as I try to explain myself. Your confusion on how I could know hundreds of students who can’t afford $40 to float a loan while having tuition reimbursements provided by employers is well merited without further explanation on my part. So here goes: I have taken a quick poll on the dozen or so people I do know directly who have tuition reimbursement and have found, without little surprise on my part, that none of them have credit cards other than VISA.

    From this information, I am making the assumption that the hundreds of people I know through association and that are in very similar financial circumstances (i.e., they’re all students with part-time jobs) are very unlikely to have a credit card other than VISA. So this means that these students don’t even have the ability to float their tuition payment with a premium of $40, leaving aside whether or not they could afford it. This means that they would all have to apply for new credit cards (MasterCard or AMEX), which is very problematic because of the aforementioned financial circumstances. They are unlikely to get a credit card with a credit line capable of floating their tuition amount, assuming they could even get a second credit card at all on a less-than-20-hours-part-time income that financial institutions look poorly on, especially when you’re trying to double your credit line by getting a second card. But even if this all happened and worked out fine in the end (a student needing the option to float tuition via a credit card thereby needing to get a second credit line that’s not VISA, etc.), see my above note on inefficiencies and opportunity costs.

    Do you see how this works? I promise this is going to be a real problem for some people even if it’s difficult to see on the surface.

  21. Bob:

    This has nothing to do with your BYU post- it constitutes a major threadjack. That said, I was hoping that I could persuade you (and any other Utah folk around here who mght be interested) to attend the blogger gathering at my brother’s house in SLC tonight- John and I, as well others (including your co-blogger, Ronan Head) will be present. It would be great to meet you. Skip over to fowlesview.blogspot.com for details…

    Back to the regularly scheduled BYU frustration discussion…

  22. Bob,

    I agree with you on the point that there are certainly additional costs involved in shifting people from credit card to check payments. As to whether those costs rise to the 2.75% fee, I don’t know, and I will defer to BYU management. I think they probably considered the additional processing required and judged that it would be less than the credit card fees, thus saving money. If the average fee is $40 per credit-card paying student, there would have to be a lot of manual processing of checks to equal that amount.

    As I see it, there are only a few categories of students:
    1) Those whose parents pay their tuition.
    2) Those who pay their tuition through student loans.
    3) Those who pay their own tuition on credit.
    4) Those whose tuition is reimbursed, so they pay by credit card.

    For category 1, this is obviously an inconvenience, but not a serious one. The parents can send a check instead of conveniently putting it on a credit card. Big deal.

    For category 2, this might prevent a student from getting airline miles, but otherwise, it’s not a problem. Get the loan, then send the check to the school instead of your credit card company.

    For category 3, these people are stupid. Get a student loan. Credit cards have much higher interest rates. If you can qualify for the credit card, you can qualify for the student loan.

    Category 4, as you have pointed out Bob, is really the only category that is caused significant inconvenience. They don’t have the cash, but they have no need for the student loan. They might be able to pay the fee, but they might not have anything but a Visa.

    My heart goes out to the people in Category 4, but quite frankly, there aren’t enough of them. BYU is paying over $1 million in credit card processing fees. I don’t think that the university should be doing that just for the small percentage of students whose tuition is reimbursed. (And that percentage is small.)

    I don’t see this as a situation in which BYU is acting like it deserves special treatment because of its association with the church. You point to the 80% of universities that allow credit card payments as evidence that it makes sense. I point to the 20% that don’t as evidence that BYU’s position isn’t unreasonable.

  23. “but on the margin aren’t the two the same? Removing an incentive has the same marginal effect for tuition payers as introducing a disincentive.”

    Yes and no. The two have an equivalent impact on behavior (they reduce it). But the point is that the new allocation is efficient, in that agents now face the true cost of their actions. Moving to this more efficient point means we gain more than we lose as a group (although people like Bob probably lose more than they gain while others gain more than they lose).

    Bob,

    I’m sure there are at least a few students with jobs that can get free tuition, have no savings, have only a visa, and cannot get a second credit card with a 1500 limit. But once again, this is BYU taking a hit for you that it is not taking for its other students. There is no reason why they should treat you special and take that hit. There are better ways to serve the world. And, frankly, the “cost of paperwork” argument sounds far worse to me than the “I lost my trips to Europe” argument. Credit card applications are incredibly easy to fill out. The ease of getting credit is, after all, one of many people’s chief objections to the industry.

  24. I agree on the welfare/allocation of costs aspect, Frank. But (and this isn’t necessarily directed toward Frank) I am suspicious of BYU using it as a justification for changing the incentives to discourage credit card use. There are probably dozens of ways for the university to save a comparable amount, but they’ve chosen this one. I think they’re hiding being economic efficiency as a way to take care of students who they see as too incompetent to look out for themselves.

    If so (and I guess I can’t “prove” it except to say that my own experience is that paternalism seems to be the justification for many, many things at BYU), I’m bothered not only by the “for your own good” reasoning, but also by the denial of it as the real reasoning.

  25. Bob Caswell says:

    I suppose, Jonathan, that part of the problem is that you give much more credit to BYU knowing what they’re doing than I do. I have had plenty of negative experiences, which I admit have made me a skeptic long before this incident. But more importantly, you haven’t read the letter in its entirety, though in the original post I did discuss the first reason this didn’t sit well with me. It went something like “BYU is savings tons of money and in addition can now provide a free new service.” As if readers are dumb enough not to see that new free services offered negate some of the self-proclaimed savings. It’s just the principle of being manipulated to believe something is greater than it really is. I’m also being manipulated to believe that this new service (something NOT involving credit cards) is FREE and really great while the previous service (credit cards) is EXPENSIVE and bad.

    And once that negative feeling arising from attempted manipulation is mixed in with yet another reason BYU is not accommodating (while 94 percent of universities charging similar amounts are), I’m not excited to feel good about something that negatively affects the 20,000 students who have used credit cards in the past (to what degree this negatively affects, we don’t know) and that has been proclaimed a huge savings (really how much of savings, if any, we don’t know). It just doesn’t add up, and I’m not willing to let the poorly written letter force a smile on my face because it says something about Church savings (a trump card they know will silence almost all complaints).

    And your assumption that students fit into four particular categories with only one being significantly inconvenienced is a little too cookie-cutter for me. Remember, we’re talking about a university that used to have 20,000+ students use a service that is now being taking away. We can’t begin to imagine all the reasons each of these students picked credit cards as their first choice among methods of payment. For instance, would have you even included the fourth category in your list had you not had this discussion with me? I doubt it. And again, I just don’t like it that customer convenience and accommodation (something that most universities site as their reasoning for accepting credit cards) is silenced by “Church saving money” and implications of “credit cards are inappropriate much of the time.”

    You know what would have made things so much better? A phrase like: “We recognize the difficulties and inconvenience this may cause many students. If you feel you’re an exception and that this will affect your ability to attend school in any way, please send a letter to and/or meet with so-and-so in such-and-such department.” But no, the letter is written with the assumption that we’re all skipping through the park because the Church is saving money.

    So, to sum up, I disagree with the decision and side with the 94 percent of these schools that put convenience and accommodation before savings. And not only that, I’m frustrated at the particular way in which BYU is handling the situation.

  26. Bob Caswell says:

    Frank,

    What I said to Jonathan and what Logan said. And Frank, just out of curiousity, have you been in denial the past ten years BYU has actually taken credit cards always hoping they’d correct their mistake and move to their true level of efficiency? Or is it just that you have always sided with them? I’m being a little facetious here, but I also really want to know!

  27. Bob
    As far as group 4 goes, what prevents them from having a student loan pay tuition and then getting reimbursed from their employer for the loan?

    in addition to easily available cc (discover is way better than Visa on the bonuses!), BYU can set up short term loans for students in exactly the same situation, so the lack of available credit isn’t really a strong argument

    Also as far as 94 percent of schools? I would think this isn’t a fair comparison. Most schools that charge what BYU charges are community colleges, continuing ed programs and technical schools (DeVry, Stevens/Heneger etc). They have a much different student base, with much different needs. As far as the Devry / Phoenix COllege type programs have a much different competition / business model than BYU so its not a very fair comparison.

  28. Bob Caswell says:

    Ok, Jay, so compare BYU to the larger group of all schools (over 80 percent still accept credit cards) or compare them to the prestigious group they wish they were in (tuition of $25,000+ and still the majority accept credit cards). And in answer to your other point, requiring students to waste their time doing something that they otherwise didn’t have to do is still my argument.

  29. Ok. But for group 4 you need to divide the group further
    4(a) those who were going to get a student loan anyway for other expenses (housing/books etc)
    4(b) those who were getting help from other sources (parents etc)
    4(c) those who were getting no student loans and no help from anyone.

    Its really only those in group 4(c) that are the issue.

    So we have a group of people, working at Wirthlin/Convergys/Etc, who aren’t getting any student loan, who have no source of assistance from anyone else who only have a visa.

  30. Excuse me, I just spent the last 1/2 hour wrapped up in this marathon thread and I need to leave my mark with a post. (Sometimes it helps me feel more productive about not working.) Part of the reason this is a difficult issue is because BYU already had a history of accepting a variety of credit cards as payment for tuition. I do not know when that started, but I imagine it was not a free service back then. I am sure BYU was not feeling any richer back then then they are now. (I get requests for donations to the Alumni Fund every year.) So the question that needs to be asked is why did they do it in the first place? If they made a mistake back then they could have shortened this thread significantly by addressing it in their letter. (On second thought, forget it — it would have made this thread even longer.)

    I am not bugged by the actual change (which probably should have been implemented long ago) as much as I am bothered about the way that it was explained in the letter. The letter implies that this NEW and BETTER way to pay for tuition is ALL GOOD. And yet when I read about saving a million bucks annually, I can’t help but wonder what BYU has spent on credit card fees for all tuition transactions to date. As Senator Everett Dirksen once noted, “A million here and a million there, and pretty soon you’re talking real money.” And that, my friends, is why I donate to the humanitarian fund instead.

  31. Actually, Tom, I think the dollar figure the beloved Ev Dirksen used was “billion” not a measly million.

    Second, I can assure you that BYU didn’t accept credit cards for tuition payments before Fall 1977. Back then, when registration was held in the Richards Building (having moved there from the Smith Fieldhouse), all tuition payments were made by cash or check in the cashier’s room. Nobody paid by PayPal either.

    There was a raised platform on one side of the room, where a well-armed BYU Security officer or two sat. Along with their sidearms, they had a shotgun or two in a rack next to them. It made paying tuition exciting.

  32. Bob,

    I think they started it years ago when it was not as much of a problem (though probably still a bad idea) because fewer people used credit cards. But over time, due to rewards programs, more people do and so the program became a real liability.

    I found your survey interesting. It appears that the average school was, as one would expect, way smaller than BYU ($10M in tuition revenue vs. $100M+ at BYU). I wonder if that makes it more efficient for those small ones to push the accounting on to the credit card people? The survey said that half of the colleges paid less than 100,000 in fees. This is obviously way lower than the costs BYU faces of, by their count, $1M. Furthermore, 20% of big schools that allow credit cards charge a fee, thus BYU is not really an extreme case. They do allow credit cards, which some don’t, but they charge a fee, which institutions like them are reasonably likely to do.

    Regardless, I predict that, barring a change in the credit card companies way of charging universities, more and more universities will move this direction and let the people pay the credit costs themselves. Feel free to let me know in five years if I am wrong!

  33. I find it hard to believe that you are even arguing about reducing the spending of tithing money on credit card charges. The Church’s appropriations committee is headed by the First Presidency and the Presiding Bishopric. Sure, you can argue that the million bucks comes from some other church allotment, but ultimately it ends up coming from tithing as that is the church’s largest endowment to the University.

    Give me a break. If the Church feels that $1 million is better spent on other church opperations and it is going to cost you nothing to go to an e-chech–which also costs the university nothing–then why are you whining. Guaranteed any e-check has been worked out with Wells Fargo, who is in partnership with the University because they have a branch on campus. Is the change inconvenient? Yes. I’m a BYU student so I can say that. However, I don’t expect tithing to give me tons of handouts. Those funds already pay for most of my education.

  34. Bob Caswell says:

    Well, as I usually do, I’ll continue to seek out convenience and accommodation somewhere outside of BYU. But now that the First Presidency has been thrown into the mix of arguments against me, I better stop expressing my opinions and behave! You know that I wouldn’t have the same issue if they’d bring back the system from 1977; paying tuition would be fun.

    One thing, though, Frank, other colleges pay less than one tenth in fees compared to BYU because only 12 percent of students use credit cards elsewhere. Since the majority of BYU students use credit cards, then it would follow that it would be more expensive for BYU. My point is that you’d think, if BYU were trying to save money, they would have figured out this cost them way more than they were willing to spend BEFORE more than 20,000 students used it as a service for a few years. So leaving the whether-or-not-credit-cards-should-be-accepted discussion aside, I’m still not that thrilled by BYU’s dealings here.

  35. Bob, thanks for explaining (#20). Your point makes more sense to me now, and i could see that i might be somewhat upset in that position.

    I agree it’s more problematic to take away a much-loved service rather than simply not offering it in the first place, where it probably wouldn’t be missed. I guess I don’t have too much sympathy though, as my college a) was an order of magnitude more expensive than BYU, b) did not take credit cards, and c) did absolutely nothing to make paying tuition easy or convenient. I remember I had to scramble a few times and borrow money from relatives short-term to cover payments. All part of the cost/hassle of higher education i suppose. In the long run, BYU students have it pretty good cost-wise.

    All beating with the First-Presidency-stick aside, I think it is still a worthwhile way for the University to save money. For instance, with that money they could fund 300 Benson scholarships (or whatever they are called now). Of course, there is almost no chance of that actually happening… I agree with Frank that in the future most schools will probably be moving in the direction BYU just has. Already most of the top schools don’t take credit cards.

  36. Bob Caswell says:

    woodboy,

    Thanks for being one of the few that acknowledged that I may be describing real issues. And I can understand your lack of sympathy in the same way you can understand my abundance of it.

    About your comment on 300 Benson scholarships… Yet another thing BYU could have handled infinitely better. Rather that just stating “we’re inconveniencing you to save money,” it would have a made a huge difference (to me at least) for them to have said, “we’re inconveniencing you so as to provide 300 additional Benson scholarships” or whatever positive reasoning that is worth much more than the “saving money” cop out. Oh, and what am I saying? BYU never did admit this to be an inconvenience. I better be careful, I don’t want to accidently give them credit where none is due.

  37. Wow, I was wrong, Bob, and you were right. I am surprised that so many schools accept credit card payments (and the attendant fees).

    However, I do wonder about the number of students falling under this 80%. For every one Ohio State, there are hundreds of tiny community colleges, which might skew things a little.

    At any rate, I sympathize with your complaint about the presentation of this inconvenience. No one likes to be b.s.-ed, and I can understand if you find it extra-offensive because it’s a church school (but shouldn’t you be used to that by now?).

    I hate shopping at Costco, because I have to pay cash, but I go there anyway because that’s the only place I can get 15 pounds of mayo. I guess I should just be happy they don’t brag about the convenience of not accepting Visa.

  38. “My point is that you’d think, if BYU were trying to save money, they would have figured out this cost them way more than they were willing to spend BEFORE more than 20,000 students used it as a service for a few years.”

    This is a hopelessly idealistic expectation for a bureaucracy. :)

  39. Last time I checked, switching from Visa to Mastercard was a seamless experience. The only resistance I can see to just switching and continuing is the problem that people that use that method now need to pay the extra cost that they are imposing on the institution.

    The real reason posters seem fixed on the lost miles, etc. that you have noted is that it seems that without the loss of a kickback available only to credit card users (who are battening at the expense of everyone else) the complaint would be about having to spend fifteen minutes switching cards …

    Obviously it is possible that you are very concerned about the way so many people will have to change to a card other than VISA. It is just that the level of irritation seems somewhat out of line with the simple solution unless there is something more.

    It is impressive that such a large percentage of students caught on to the process of making a profit off of the transaction costs that BYU had to pay, but I don’t see the virtue in anyone complaining that they no longer get to keep that profit.

  40. OK Bob, you lost a perk and the university stands to save ALOT of money.

    A million dollars……Probably over time. Thats a million dollars of tithing dollars. . . I would say this policy, although it detracts from your freebies, is a VERY responsible thing for the university to do. I think they should have done it sooner.

    In the end if your are a consumer that doesnt like it……go elsewhere. I am sure the convenience of paying through another means is not as much of a hassle as moving to another (probably more expensive) university.

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