Yes. A lender's decline means its loans aren't available to your students, not that your school can't offer a plan. Ask the lender for its reason and what would change it, apply to another lender if you want one, and offer your own plan in the meantime, a deposit at enrollment and the balance on a schedule you set. A new for-profit school can't offer federal aid until it has been accredited and in existence for two years, so for the first cohorts the school's own plan is often the main way students pay over time.
In PaycovePaycove runs your school's own payment plan from the enrollment in your CRM, with no lender and no credit check on the student. See it in 15 minutes →
Why do student lenders decline a school?
Lenders don't say much about it in public. Meritize's page for schools says "Not all schools are eligible for funding" and lists no criteria. Climb Credit's page for partners describes the programs it works with (bootcamps, trade schools and certificate programs) and its resources page says its details "are not meant to qualify an institution". Neither publishes a checklist a school can meet.
So the reason for your decline is in the decline itself, not on a website. Before you do anything else, get three answers from the lender, in writing if you can:
- Why the school was declined.
- What would change the answer, and whether it's something you can show them.
- When you can apply again.
Write the answers down with the date. They tell you whether this is a "not yet" or a "no".
What does a decline mean for your first cohort?
The students who would have borrowed need another way to pay. For a new for-profit school, federal aid isn't that way yet. Under 34 CFR 600.5, a proprietary institution has to be accredited and "in existence for at least two years" to be eligible, and the Department of Education counts that as 24 months of providing a continuous program before the eligibility application.
That leaves a new school's first students three ways to pay over time:
- A loan from another lender that will work with the school.
- A payment plan from the school itself.
- Paying in full before or at the start of the program.
What are your options after a decline?
Apply to another lender. Each lender sets its own rules for schools and students. Meritize, for example, says its loans "have both underwriting and credit requirements", with merit information considered on top, and that each applicant gets a soft credit check. A second lender may say yes where the first said no, or decline for the same reason.
Ask about the lender's own payment plans. Some student lenders also run interest-free plans for partner schools. Climb's partner page lists "Interest-free recurring payments" with no credit checks, and its resources page says that for payment plans "you only receive what students actually pay". These still depend on the lender agreeing to work with your school.
Run your own payment plan. The school sets the deposit, the schedule and the terms, and students pay the school directly. There's no lender to approve the school and no credit check on the student. Your school does need a way to take payments, such as a Stripe account, and Stripe verifies the business behind every account it pays out to.
Reapply when you have the record. Keep what a lender could ask to see: enrollments, completions and payments collected. Your own plan builds part of that record while you wait.
If Climb was one of the lenders, Climb Credit vs Paycove sets the two side by side.
How does a school-run payment plan work?
The student pays a deposit when they enroll and the balance on a schedule. On a $14,800 program, that might be $1,500 at enrollment and twelve payments of about $1,108 after that. A program that runs in weeks rather than months can take its payments weekly or every two weeks instead, to match when students are paid.
Three things change when the plan is yours instead of a lender's:
- The money arrives as students pay. A lender may advance tuition at the start of the program. Your own plan pays you over the length of the plan.
- Late payments are yours to follow up. Set up reminders before each due date, and decide in advance what happens when a payment fails.
- The student stays your student. They pay your school, on your terms, instead of repaying a lender after the program ends.
For what the student pays on each path, a 0% plan from the school, or a loan from a lender? works through one $14,800 program both ways.
Is a school's own payment plan a loan?
Not in the everyday sense, since there's no lender and no interest. But federal Truth in Lending rules and some states can still treat a plan as credit, depending on how many payments it has, how long it runs and where your school is. Is a 0% payment plan a loan? walks through the rules, and California's tuition plan registration covers California's rules for schools that offer their own plans. Check both before you set your terms.
What should a declined school do this week?
- Get the lender's reason and what would change it, in writing.
- Decide on your plan terms: the deposit, the number of payments, how often, and what happens when a student withdraws.
- Put the terms in your enrollment agreement, so what the student signs matches what you charge.
- Set up how you'll take payments and remind students before each due date.
- Put a date in the calendar to reapply to the lender, if you want one.
Paycove runs your school's own payment plan from the enrollment in your CRM, with no lender and no credit check on the student.
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