Traditionally when students pay their tuition they are restricted to the usual forms of payment – mainly cash, cheque or electronic bill payment.
That changed a couple years ago when Aeroplan introduced a way for consumers to use their rewards – allowing them to pay the tuition costs at a number of post-secondary schools.
How it Works
Students, parents and anyone else looking to redeem Aeroplan Miles can sign up at Higher Ed Points – a site designed to be the middleman between the person holding the points and the school. The site relies on pooling points towards one recipient (the student) who can then use them to pay their tuition. The site even has a draft email students can use to request people they know to donate their Aeroplan Miles they don’t have a use for.
Once the rewards are redeemed, an email is sent with a confirmation code and instructions to transfer the amount to the post-secondary school.
It’s free to join and anyone with a valid student number at the participating post-secondary school can receive the points. They don’t even need an outstanding balance to receive the points – they can be saved up for future tuition costs.
It looks like the redemptions are non-refundable so it’s important to read the fine print and make sure the school is participating – if not, you’ll be out of luck.
The program doesn’t appear to be as popular as they thought it would be. In January there were a small fraction of the users they had hoped to see. In Nova Scotia, one school reported that the average redemption is for $1,000 and the highest was $4,500.
Another possible reason for the lukewarm start would be the target audience. Since most students have student loans to pay back and lower incomes, they are less likely to have a large amount of Aeroplan Miles saved up simply because they don’t spend enough. They would then rely on their parents for the points, who are more likely to have a larger points balance. Luckily in this case the Aeroplan Miles can be used to pay the tuition for someone else (ie. a child, grandchild, etc).
One possible reason for the lack of program success (so far) could be the redemption rate. 35,000 Aeroplan Miles gives you a $250 credit at a post-secondary institution to pay down tuition costs (or any other school fees).
Similar to Air Miles, it is well known that the most value for Aeroplan Miles is by redeeming them for flights. Sure, there are other options (including tuition), but you get the most for your Aeroplan Miles when you use them to book flights.
If you’re not getting full value for your Aeroplan Miles by paying tuition, most people would prefer to use them on flights instead to maximize their rewards.
A study conducted in 2011 showed that approximately 90% of Canadians belonged to at least one rewards program. This is higher than the U.S., where only 74% belong to a rewards program.
We not only love our rewards, we love the selection that comes with different rewards programs. In 2013 a study showed that the average person belonged to over 8 different rewards programs.
But with all this selection comes customer confusion – it’s hard to determine which program is best and which are a waste of time. This means consumers are becoming more picky when signing up for rewards programs.
Using rewards programs to pay tuition may help some, but the redemption rate likely isn’t high enough for most people to want to take advantage of the offer. They’re more likely to use their Aeroplan Miles on flights so they can get the most for their money.
Personally, if I had a child in college I likely wouldn’t use my rewards points to pay their tuition – I would instead pay the equivalent in cash, and save the rewards points on something more lucrative (flights).
It will be interesting to see if other rewards programs start to offer a similar program and allow consumers to pay tuition fees using rewards points.
What do you think? Would you use rewards points to pay tuition fees?