Pay Tuition Easily: A Secure New Way to Use Venmo

You can now pay for college the same way you might split a meal with friends.

A handful of major universities now accept digital payments through PayPal and Venmo for tuition and fees, and more colleges are expected to make the change soon.

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“Tuition is one of the biggest payments a family will make, and it should come with the same flexibility and security that millions of people already count on PayPal and Venmo for every day,” Frank Keller, president of checkout solutions at PayPal, said in a news release.

PayPal, which owns Venmo, announced the feature Wednesday in a partnership with the education payment companies Illumia, Nelnet Campus Commerce and TouchNet, which collectively process direct tuition payments for thousands of colleges in the U.S.

For now, Bellarmine University, Butler University, Kansas State University, Michigan State University and Texas Tech University are among the first wave of schools to accept Venmo and PayPal “with others to go live in the coming weeks and months,” a PayPal spokesperson tells Money.

The new payment options at these colleges come at a time when tuition bills across the country are due for the fall semester. Students and families can use their Venmo or PayPal balances, linked credit cards, debit cards or bank accounts to pay.

The convenience of these added options may come at a cost, however. While Venmo and PayPal do not directly charge fees to make payments, colleges do collect processing fees for using those options.

For instance, Kansas State University charges 2.95% for domestic card payments from Venmo or PayPal, and 4.25% for international cards, with a minimum fee of $3 for transactions over $20. The fees are nearly identical for payments coming directly from credit and debit cards. (Payments by cash, check or direct ACH transfer from bank accounts do not incur fees.)

Given the cost of tuition, processing fees can add up quickly. Undergraduate tuition for one semester at K-State as a Kansas resident runs above $13,000. While over 80% of students receive some form of financial aid, fees on a standard tuition bill could potentially exceed $380 for residents — and much more for out-of-state and international students.

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For such large sums of money, families will also want to consider the risks of storing potentially thousands of dollars in a digital payment app. Venmo and PayPal are not banks, and balances kept on the apps are thus not insured by the FDIC.

“Deposit insurance only protects against the failure of the bank or credit union and does not protect the customer against the failure of the nonbank company itself,” according to an analysis from the Consumer Financial Protection Bureau under the Biden administration.

Wednesday’s announcement applies only to what’s called bursar payments, or charges directly on the school’s payment portal. Student loan bills, which are handled through third party loan servicers, are not affected by these changes.

“Millions of students and families already use PayPal and Venmo for everyday purchases,” a PayPal spokesperson says. “Bringing that same experience to tuition payments means one less login, one less account to manage and a checkout experience that feels familiar.”