Currency exchange and wire transfer fees can add up when paying for a U.S. college education.
Iker Marcaide was shocked to learn in 2008 that sending a tuition payment to MIT's Sloan School of Management
via his Spanish bank account would cost more than $1,500. "The fee the
bank charged to exchange currency, plus the wire fees, added more than 3
percent to a tuition bill that already topped $50,000," says Marcaide.
"Plus, the money wire was lost for several weeks."
The next year, Marcaide started peerTransfer to secure lower group exchange rates for international students.
Banks or wire services charge varying percentages to exchange one
currency for another. For instance, a student who exchanges Canadian
dollars for U.S. dollars when exchange rates are even would still pay a
percentage of the exchange rate for the transaction, he says. The wire
fee for transferring money is an additional cost.
If Marcaide had found a wire service with similar rates to
peerTransfer when he attended MIT, he would have paid less than $750
dollars to exchange currency.
[Learn how international students can cut U.S. college costs.]
International students should follow the tips below to pay the lowest
currency exchange fees possible on their tuition payments, while
ensuring their payments arrive on time.
1. Only consider university-approved wire services: Students should find out which wire service their school works with by E-mailing the campus bursar or accounting office, says Iowa State University
International Recruiter Timothy Tesar. They can also find this
information on the university's site, notes Western Union's Vice
President of University Solutions Ben Kavalec.
Universities verify the legitimacy of companies they choose to work
with, according to Tesar. Given that students are sending substantial
amounts of money via these wire transfers, they need to trust that the
funds won't get lost or stolen, he notes. Compare the total cost of
currency exchange between the wire service your university uses and your
home bank, experts recommend.
[Start saving for an American education early.]
2. Wire tuition payments directly to universities:
Because of the potential for accruing fees from two different banks,
wire money directly from your country's bank or through a wire service
to the university the student will attend, Tesar recommends.
This limits the likelihood of lost funds and eliminates the
possibility of additional fees charged by a U.S. bank. Generally,
schools will charge little to no fees to accept payments from banks or
wire services, he says.
Often, the price is higher if students choose to wire funds from home
bank accounts to a U.S. bank, peerTransfer's Marcaide adds. For
example, a Canadian student exchanged Canadian dollars to U.S. dollars
at a one-to-one exchange rate. The home bank added a 3 percent fee on a
$10,000 transfer ($300); meanwhile, the student had set up a bank
account in the United States to receive the money, which charged another
$300. A student who once had $10,000 available to pay for tuition
suddenly had $9,400.
[Learn about additional international student fees.]
3. Confirm exact fees and payment arrival: Whether
you choose a wire service or a bank, confirm all possible charges and
the exact date of arrival for the payment, says Marcaide.
Sometimes a bank will utilize an intermediary bank in the middle of
the transaction that charges its own additional wiring fee. If students
are unaware of this charge, they won't wire enough money to cover
tuition—and the result could be an enrollment block by the school, he
cautions. A late payment could lead to the same problem.
"We ensure that the amount that the student is expecting the school
to receive is received, taking care of all potential fees that could
happen in the process," Marcaide notes of peerTransfer's service. It's
important that any bank or wire service that students choose do the
same, he recommends.
Reyna Gobel, frequently quoted as an expert on student loans and college costs, is the author of "Graduation Debt: How To Manage Student Loans And Live Your Life" and "How Smart Students Pay for School: The Best Way to Save for College, Get the Right Loans, and Repay Debt." She has appeared on PBS's Nightly Business Report and speaks regularly at CollegeWeekLive.
Source : usnews.com