Higher education is vital for personal and professional growth but rising tuition costs make it harder for students to attend. While financial aid like scholarships and loans help, delays in disbursement can jeopardize enrollment.
A PYMNTS Intelligence report, “Making the Grade: Promoting Faster Payments in Education,” a collaboration with Ingo Payments, examines how modernizing payment systems is crucial to ensuring timely financial support for students.
Delayed disbursements are a significant problem for students and educational institutions. Private schools, particularly smaller ones, often rely heavily on scholarship funds to cover operational costs. For example, at the Elijah School in Florida, all 49 students receive scholarships from Step Up for Schools, a nonprofit organization. When payments from the nonprofit were delayed, the school had to borrow money from its parent church to cover salaries.
This highlights the precariousness of relying on inconsistent funding sources. Additionally, delays in scholarship payments can lead to widespread consequences, such as missed paychecks for staff and a lack of necessary supplies for students, which puts additional strain on schools that are already operating with tight budgets. According to the report, more than 40% of small private schools say delayed scholarship payments are a major issue, which often disrupts their daily operations.
Federal student loan disbursements are plagued by inefficiencies, creating challenges for borrowers. When the federal government resumed student loan repayments in 2023 after a pause due to the pandemic, many borrowers faced confusion. Millions had their loans transferred to different servicers, which required them to manage unfamiliar systems. This led to an increase in call volumes to loan servicers, which were already understaffed after cuts during the pandemic.
As a result, wait times for borrowers seeking help surged from 12 minutes in August to over 70 minutes by October. Customer service delays resulted in 50% of borrowers abandoning calls, compared to just 17% before the payment restart. These inefficiencies compounded financial difficulties for students who rely on timely assistance to manage their loans.
Another issue complicating education disbursements is the lack of modern, accessible payment solutions for students. According to the report, 74% of students currently do not have access to tuition payment options via an app, despite the growing demand for such services. Additionally, 68% of students want to manage all aspects of their education — ranging from class schedules to tuition payments — through a single campus app. But fewer than one-third of students currently have this capability, and 73% report needing multiple apps to interact with their schools.
Additionally, students often face high fees with banking products tied to their schools. These arrangements, designed for profit rather than convenience, further burden students already struggling to manage their finances. Outdated payment systems for tuition, scholarships, and loans cause delays and frustration for students and institutions. Adopting modern solutions like real-time processing and app-based management can ensure timely support, reduce missed deadlines, and streamline transactions. Faster, more efficient payment methods are crucial for supporting students’ educational goals.
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