The University of California, Davis, Graduate School of Management today announced a pilot program to offer its online MBA students the option to apply for interest-free deferred tuition payments, increasing access and affordability to the nationally ranked business school.

The plan will be offered by the Graduate School of Management in partnership with EdAid, a provider of deferred tuition options for higher education, and with the support of the school’s partner 2U, Inc. (Nasdaq: TWOU), a global leader in education technology.

UC Davis’ deferred tuition program will be offered to new students in the online MBA program — known as MBA@UCDavis — who enroll in either the January or April 2022 cohort. It aims to reduce the financial barriers to pursuing an MBA by helping students avoid interest payments. This commitment to access and affordability lowers the final cost of high-quality business education and aligns opportunity with outcomes, GSM officials said.

“Studies show a large segment of deserving students are unable to pursue higher education due to financial constraints,” said H. Rao Unnava, dean of the UC Davis Graduate School of Management.

“This program will attract such deserving students and contribute to an even more diverse student body, one of the hallmarks of the MBA@UCDavis,” Unnava said. “As a land-grant university, we are delighted to be able to expand access to higher education, a central tenet of our mission. We believe we are the first business school in the U.S. to offer MBA students deferred tuition payments without interest.”

Deferred tuition without interest

As student loan debt in the U.S. reaches $1.7 trillion, universities, policymakers and employers are considering alternative ways to fund education.

While income-based payment models like income-share agreements, or ISAs, are growing in popularity, many end up requiring students to pay back significantly more than the cost of the program. Unlike an ISA, UC Davis’ deferred tuition plan allows students to only pay what they defer, with zero interest charges.

The deferred tuition plan for MBA@UCDavis is a straightforward way to reduce financial barriers for U.S.-based students. Under the plan:

• Eligible students will pay tuition for the first half of the program and can defer payment of tuition for the second half of the program, net of any scholarship funds, until after graduation.
• The plan has zero interest charges. Students only pay the amount they defer.
• Upon graduation or program withdrawal, students will pay 10% of their annual gross income as monthly payments.

“Deferred tuition has a direct impact on access and affordability. This model of shared investment in student outcomes is the future of higher education funding. As we emerge from the global pandemic, UC Davis, 2U and EdAid are committed to widening participation to ensure big, bold thinkers have the on-ramp to solve society’s biggest challenges,” said Tom Woolf, founder and CEO of EdAid.