A small but growing number of colleges are now letting students and their families use PayPal and Venmo to pay tuition, a shift that reflects the increasing role of digital wallets in everyday transactions.
Bellarmine University, Butler University, Kansas State University, Michigan State University and Texas Tech University are among the first to integrate these payment options into the platforms their bursar offices rely on—Illumia, Nelnet Campus Commerce and TouchNet. The move, announced Wednesday, is part of a broader push by payment processors to embed themselves more deeply into campus life.
Don Smith, Illumia's senior vice president and general manager of integrated payments, said the goal is to meet students where they are. "A modern tuition payment experience has to work for both sides of the transaction," he said. "Students and families want the flexibility to use payment methods that fit how they manage their money, while institutions need those options to work within the systems and processes their teams already rely on. This integration helps schools expand choice in a practical way, improving the payer experience without creating a disconnected path for campus teams."
The move comes as PayPal, which owns Venmo, has been courting the higher-education market. Over the past few months, the companies have offered student-athletes the chance to receive institutional revenue-share payments through their platforms—a development that has drawn attention from compliance officials and financial aid administrators. But the tuition payment option raises its own set of questions.
For one, students and families may face transaction fees, and each school decides how much to charge. Bryan Dickson, education policy director at the National Association of College and University Business Officers, highlighted the potential cost. "If there is a 2.5 percent credit-card transaction cost for a $25,000 tuition payment, that represents $625 that the institution may have to absorb, or where permitted, pass on to the payer," he told Morningstar.
There are also security concerns. Money held in a PayPal or Venmo wallet is eligible for "pass-through" insurance through the Federal Deposit Insurance Corporation via Goldman Sachs, Wells Fargo or Chase. But that coverage is not as broad as it might seem. As PayPal's own website notes, "FDIC pass-through insurance protects against the failure of a Program Bank, not the failure of PayPal. PayPal is not a bank, does not take deposits and is not FDIC insured."
The development also intersects with broader policy debates. For instance, the Justice Department recently sued New York over its policy of offering in-state tuition to undocumented students, a case that could affect how colleges handle payment and residency requirements. And as schools embrace digital payments, they must also navigate state and federal rules on tuition collection and financial aid.
For now, the five universities are a test case. If the integration proves popular, more institutions could follow, especially as the Trump administration pushes for tighter oversight of federal payments and as states like Texas and California face scrutiny over their use of federal funds. The move also comes amid broader efforts to modernize campus finance systems, with some schools already expanding their physical footprint to attract students.
Still, experts caution that convenience must be weighed against cost and security. As more students use mobile apps for everything from coffee to rent, tuition may be the next frontier—but it is a frontier with significant financial and regulatory implications for both families and institutions.
