Higher education is an important step that can propel people onto a particular career path or level up their skillsets so they can succeed in their existing workplace environment. Education is also an investment – many students can’t afford to pay for higher education upfront and require a loan to help them cover tuition and other related expenses.
That’s where education installment plans come in. With US student loan debt totalling in at a staggering $1.774 trillion, many students are looking for alternative ways to fund their studies – 38% of consumers say they would consider using installment payments for education and certifications.
Here, we’ll explore why schools need to present students with options and look at how installment plans present a great alternative, both from the perspective of students and educational institutions.
H2: Understanding education installment plans
Education installment plans offer financial aid within a flexible repayment schedule that helps students to avoid potentially crippling student loan debt.
There are various types of education installment plans, which are structured differently depending on the educational institution. Some universities and educational institutions have their own installment plans set up internally, while others will partner with a third-party payment provider.
Generally speaking, installment payment plans allow students to pay for their tuition (and often other education-related costs) through a series of installments. The key differences between installment plans and student loans are:
- Installment plans are set up so that students repay while studying – typically on a monthly basis during the school year or at set times during the semester
- Students typically pay a small administrative fee to set up their plan
- Education intallment plans are often interest-free, while student loans have various interest rates, fees, and potential penalties attached
- Students that require more financial support can combine installment plans with a student loan
Installment plans allow students and their families to break down the cost of higher education into more manageable and budget-friendly pieces. This means that post-secondary institutions can provide students with flexible alternatives, removing barriers and enabling them to pay for their education in a format that fits their lifestyle and financial situation.
H3: Splitit’s education installment plans
Splitit’s education installment plans are a white-label solution that are designed to become part of your existing brand and ecosystem.
This existing card BNPL format is designed for students who have a credit card and want to dedicate their unused credit towards their education:
- Students can split the cost of their education over a series of installments
- Approval is based on available space on their existing credit card
- A pre-authorized hold for the full tuition amount is placed on their card and reduced each time an installment is debited to the card
- The monthly amount will be automatically taken from their card each month until the payment plan is complete.
For students, this means there’s no need to take out an additional loan, undergo a credit check, or pay additional interest – approval is quick and straightforward, entirely based on their existing credit card.
For educational institutions, this allows you to implement an installment plan that lives entirely within your own branding and structure, so you can offer students a flexible payment alternative as a holistic part of your establishment.
H2: Advantages of education installment plans
There are many reasons that students and educational institutions are looking towards installment plans as either an alternative solution or supplementary support to student loans.
H3: Improved affordability
Installment plans break down the large expense of tuition and other education-related costs into manageable monthly or quarterly payments. This improves affordability in many ways.
Students and their families avoid having to pay large sums upfront and instead can budget smaller payments across the school year. It also reduces the financial pressure of student loans, which can cause long-term strain for students who are shouldered with the burden of interest rates, missed payment penalties, and other associated costs.
For universities, this encourages recruitment as they can open their doors even wider and welcome in a more diverse body of students. It also supports retention, as schools are offering a financial solution that will allow students to complete their studies within a realistic and affordable payment structure.
H3: Flexibility and convenience
Splitit’s education installment plans are a flexible solution that can fit all types of students and course structures. Whether it’s a 4-year undergraduate degree or a short-term certification, the application and approval process is quick and straightforward as all that’s needed is an existing credit card.
The repayment schedule can be tailored to fit the needs of the student and the structure of the course. This makes it easier for students and their families to budget surrounding these installments on a monthly or quarterly basis.
For universities, this provides a solution that they can apply to different types of learners and course structures. When developing courses and materials for young people entering post-secondary education, universities can present a flexible payment solution that allows them to avoid the burden of student loan debt. When reaching out to lifelong learners or people who are entering university after spending time in the workforce, universities can give them a way to pick up and pay for their studies in a flexible format that fits their current lifestyle and budget.
H3: No need for a credit check or new loan
With our education installment plans, financing is entirely based on the credit card that belongs to the student (or their family). This eliminates the need for an additional line of credit or a high-interest loan – the only interest or fees they’ll be required to pay are those that are already associated with their credit card.
This has many important benefits. Students who can’t afford to pay for tuition upfront are able to access education without having to pay the full sum upfront or rely entirely on student loans. As they’re using an existing card, there’s no need to undergo additional credit checks or face fees and penalties.
In the long-term, this allows many students to avoid high-interest student loan repayments. For those who have funded their studies using a combination of student loans and installment payments, the financial impact is reduced.
For universities, offering flexible payment installment plans can be a differentiator that allows them to stand out from other establishments and attract students who are looking for these types of solutions.
H2: How installment plans support educational goals
Offering a flexible payment solution has many benefits, both for students and the financial institutions.
H3: Enabling access to higher education
Education installment plans can help students pursue higher education in a way that allows them to avoid the significant debt of student loans. This means that more people can enrol in the programs they need to succeed, whether it’s a long-term degree or a short course.
For schools, this amounts to increased enrolment and retention, as schools are able to offer their students access to high-quality education in a format that fits their financial situation and budget.
H3: Facilitating professional development
As well a supporting undergraduate or post-graduate studies, education installment plans are extremely useful for people who are already in the workforce and looking to level up or pivot their career through professional development programs or training courses.
This installment payment solution means that students work and study at the same time, structuring their education around a flexible repayment schedule that fits their budget and career advancement goals.
For universities, this is a great way to structure programs to suit different types of learners, including people who are pursuing a work-study format or people who are returning to education level up their skillset after a significant break.
H3: Empowering lifelong learning
According to Pew Research Centre, 87% of adults in the workforce believe it will be important or essential to engage in training or skill development to keep up with the changing workplace.
Education installment plans can facilitate this continuous learning and personal growth. The flexible format enables people to budget their finances and access the courses they need to fulfil their career ambitions while remaining active in their current roles.
For universities, this is an opportunity to provide a flexible payment option to the older demographic, who usually have significant space on their credit cards and are looking for ways to budget their finances while maintaining their existing assets.
Real results of educational installment plans
We’ve worked with leading institutions to make education more accessible to students across all walks of study, from online learning to post-graduate studies.
Fortuna Admissions, an MBA consulting firm, provides students with the bespoke coaching and guidance needed to gain entry into the world’s top-tier business schools. We partnered with them to set up an installment payment solution, which allowed their internationally-based students to get the expert educational support they needed through a flexible and easy-to-access BNPL format.
The results clearly demonstrate that students are looking for flexible payment options – we helped Fortuna Admissions boost AOV by 15% and accounted for 72% of their sales. Learn more about the rise of installments for education payments.
Installment payment plans are a solution that can open up a whole world of possibilities for students and educational institutions.
For students, it’s a payment solution that enables people to access the higher education they need to advance their careers without having to take on the burden of student loan debt. They’re able to unlock the existing potential of their credit card and avoid taking out an additional line of credit or paying interest on a large loan.
For universities, this helps to boost enrolment from students across all walks of life, whether they’re entering higher education for the first time or looking to level-up their skillset while working. Our white-label BNPL platform means that education installment payments become a seamless part of your brand, so you can differentiate from competitors and serve your student body with the flexible solutions they deserve.
Learn more about how Splitit can be used to diversify your payment options and get in touch with our team to find out how we can help you.