How much are you charged to pay tuition? A Case Study
Here is a hypothetical scenario.
You have some Canadian dollars (CAD), and need to pay your school $10K US dollars (USD) in Florida for the new semester.
This afternoon’s USD:CAD mid-market exchange rate is 1.3357. It means that you get $1 USD with every $1.34 CAD. In an ideal world, you will need $13,357 CAD to make $10,000 USD.
You read my previous post, and know that there are costs associated with currency exchange.
If you have a bank account in the US, here are your options:
1. Cash Conversion Method
2. Bank-to-bank Transfer
3. PayPal-to-bank Transfer
4. Using Other Services to Transfer to Bank
If you don’t have a bank account set up in the US yet, here are your options:
5. Mailing An International Money Order
6. Direct Credit Payment
7. Direct Debit Payment
1. Cash Conversion Method
Under this strategy, you strap Canadian dollars on your waist while flying to Florida. Assuming that it is not lost in the transit, you can declare cash holdings at the customs, who will let you through if you present enrolment evidence. They may ask a few extra questions, but you do not fear. On arriving in Miami, you will go to a cash exchange store with an appointment, and lug the cash to the bank just two streets down the road, deposit your money, then transfer to the school using your payment account.
You’d need about C$13,600, depending on the rates offered by the downtown cash merchant.
2. Bank-to-bank Transfer
This is the most familiar method. You look up the transit routing numbers of your cheque book, and use your Canadian bank account or ask your parents to make an international wire transfer. Once the money is in your US bank account, you’d set up a direct debit transfer to your school.
Unfortunately, you’d usually discover that your bank does not allow online conversion over C$10,000. You or your parents visit a branch before boarding a flight. It gets done: your bank charges ~3.2% foreign currency spread (embedded in the currency exchange rates offered), and a US$35 incoming foreign transfer fee. Your parents pay anywhere from $0 —C $30 as an outgoing transaction fee.
You’d need about C$13,785 + C$60 total fee = C$13,845.
3. PayPal-to-bank Transfer
You have a PayPal account setup which is linked to your bank accounts in Canada and the US. You can fund a PayPal money transfer with your Canadian bank account. Once the money is in your US bank account, you’d set up a direct debit transfer to your school. Because you are sending CAD to USD bank account, you are charged C$0.30 + 2.9% transaction fee + 3.5% currency conversion fee (including C$2.99 fixed fee).
Based on the rates provided, you’d need about C$13,921.
4. Other Transfer Services
Other transfer services offer transfer services directly to your US bank accounts. You can fund a money transfer with your Canadian bank account. Once the money is in your US bank account, you’d set up a direct debit transfer to your school. If you use other transfer services like TransferWise, you’d pay less spread and a reasonable fee. You only need to make sure to route the money correctly through a larger bank if you use a small American Bank.
You’d need C$13,367.50 CAD to fund your tuition.
This is very close to the mid-market rate. Of course, you have an advantage as a CAD holder, because holders of other currencies will easily hit maximum transfer limit unless they send valid proofs of education enrolment, thus having to pay double or triple the fees by making multiple transactions.
5. International Money Order
You can go to a money service merchant of a bank to purchase a money order in a supported currency. You will mail this money order by courier to the university in the destination country. This method involves the usual currency exchange spread, the costs of mailing the money order, and an additional processing costs of issuing an international money order. There is also a risk of fraud and property loss in the mailing process, so this method is not recommended.
6. Direct Credit Payment
Services like Flywire offers paying tuition with your credit card. You will pay with your Canaidan or US credit card directly. This accumulates points on your credit card reward program, and you estimate that to be around C$140 in value. In addition, paying with credit card means you can get some liquidity for the month up to your credit limit, if you are in need of cash flow.
You’d need C$14,004 minus C$140=$13,864.
7. Direct Debit Payment
Services like Flywire also supports paying directly with funds in your Canadian bank, without going through your US bank. They charge a reasonable spread and fees, and support large payments as well as 24/7 multi-lingual support.
You’d need C$13,702 to fund your tuition for the semester.
We showed quite a bit of Flywire in this post.
Flywire is a service that allows you to pay from almost any country or bank in your home currency. Advantages include:
- Fast — transfer processed in a few days
- No bank fees or further charges
- Competitive exchange rates and a best price guarantee
- No short payment for your university
- 24/7 Payment tracking via a student dashboard and SMS, and notification
- Multilingual customer support via phone, Skype and email
Want to try using Flywire for tuition payment? You can lookup if your institution partners with Flywire on the Flywire payment portal. Always look for Flywire instructions on your institution’s official payment webpage to get the official payment advice.
