Universities Tap PayPal and Venmo for Tuition Payments as Digital Wallets Enter Higher Ed Billing

A look at current business developments across digital platforms.

Major college payment networks are expanding beyond traditional banking channels, allowing families to settle college tuition bills using PayPal and Venmo.

Bellarmine University, Butler University, Kansas State University, Michigan State University, and Texas Tech University are among the initial schools adopting the technology, with additional higher education institutions slated to roll out the service later this year.

Depending on the specific university and the selected payment source, families and students could incur processing or transaction fees.

The digital wallet features are being embedded directly into existing campus administrative software, including Illumia, Nelnet Campus Commerce, and TouchNet, which manage tuition processing nationwide.

College tuition represents one of the largest out-of-pocket expenses for American households, with average annual costs ranging from approximately $10,000 at public four-year in-state institutions to over $40,000 at private non-profit universities. Integrating digital wallets into established enterprise payment channels allows higher education software vendors to modernize billing systems while capturing consumer payment preferences already established in retail markets.

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A growing list of higher education institutions is giving students and families the option to settle tuition charges through PayPal and Venmo. (iStock / iStock)

“A modern tuition payment experience has to work for both sides of the transaction,” Don Smith, Illumia’s senior vice president and general manager of integrated payments, said in a statement.

“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,” Smith added.

Over the past year, PayPal and its subsidiary Venmo have aggressively sought to expand their footprint across higher education, providing student-athletes with mechanism options to receive institutional revenue-sharing disbursements. Venmo has simultaneously broadened its campus outreach via Name, Image, and Likeness (NIL) athlete partnerships, university-branded debit cards, campus brand ambassadors, and promotional events during athletic game days.

Processing fees and transaction charges may apply for students and families depending on the university and funding source chosen. (Justin Sullivan/Getty Images / Getty Images)

Millions of households and students already rely on these digital payment apps for routine financial activities, such as buying groceries, dividing rent payments, and transferring funds between friends and family.

“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 and PayPal, said in a statement. “That’s why we’re proud to bring that same choice and protection into the reliable systems schools have already built.”

While both companies emphasize that PayPal and Venmo employ security controls such as encryption protocol and real-time fraud monitoring, financial regulators have repeatedly warned consumers that funds stored on nonbank financial apps do not automatically enjoy the comprehensive deposit insurance protections guaranteed by traditional federally insured banks or credit unions.

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Financial consumer regulators advise that funds maintained within nonbank mobile payment platforms may lack traditional government deposit insurance coverage. (Andrew Harrer/Bloomberg via Getty Images / Getty Images)

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Pass-through FDIC insurance coverage may apply to select eligible PayPal and Venmo balances when those funds are deposited into PayPal’s partner program banks, which presently include Goldman Sachs Bank USA, Wells Fargo Bank, and JPMorgan Chase Bank, though unplaced or ineligible balances remain outside this protection.

Addressing these regulatory protections, PayPal noted in a statement that pass-through coverage “protects against the failure of a Program Bank, not the failure of PayPal,” emphasizing that “PayPal is not a bank, does not take deposits and is not FDIC insured.” Consequently, while funds temporarily routed through program banks like Goldman Sachs Bank USA, Wells Fargo Bank, and JPMorgan Chase Bank may carry pass-through safeguards, unallocated balances held within digital app wallets remain subject to the regulatory distinctions governing nonbank payment providers.