“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,“ PayPal President Frank Keller said. “That's why we're proud to bring that same choice and protection into the reliable systems schools have already built.“

PayPal, which acquired Venmo in 2013 for $800 million, said the initiative aims to bring a “trusted” and “familiar” alternative to tuition payments. 

Fees will be set by the universities individually. At MSU, students will be subject to a 2.75% service fee on all tuition payments using the two apps. The same service fee is applied to other digital payment options, including debit and credit cards, Apple Pay and Google Pay.

Service fees can be avoided by using the bank account payment method to pay by electronic check, MSU spokesperson Mark Bullion said. 

“Expanding MSU’s digital payment options for student account balances provides students and authorized payers greater flexibility and convenience in managing their payments,” Bullion said. “The additional payment methods reflect the university’s ongoing commitment to improving the student experience.”

Holding the necessary amount of money for tuition payments in a Venmo or PayPal account may come with risk, as the peer-to-peer payment systems are not federally insured. Traditional banks and all accounts in them are insured up to $250,000. Venmo and PayPal are not banks, however, and therefore do not have the same coverage. 

Tuition payments made using either Venmo or PayPal will have the same security as other purchases, including encryption and fraud monitoring.

This isn’t the first time the companies have explored new ways to reach college students. Last year, Venmo began integrating itself further into college campuses through name, image and likeness deals for student-athletes and campus sponsorships in the Big Ten and Big 12. The company now offers college-branded custom debit cards.