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Federal student loan servicers don't accept credit cards as a payment method, and private student loan providers typically don't either.
It may be possible to use a third-party payment provider, a balance transfer or a cash advance to pay student loans using a credit card. But these options can be risky and expensive. You'll pay extra fees and more in interest.
Instead, if you're struggling to afford your loans, look into options to reduce or pause payments. Or, if you can afford to pay off your loans in full and want to earn credit card rewards in return, first calculate how much you'll pay in fees; using a workaround to put payments on a credit card may not be worth the hassle.
How to Pay Student Loans With a Credit Card
While it's likely not possible to make student loan payments with a credit card through your student loan servicer, here's how you can do so using a few extra steps.
- Use a third-party provider to make monthly payments by credit card. Services such as Plastiq allow you to pay bills with a credit card, but you'll pay fees on each payment (Plastiq charges a 2.9% base fee and $0.99 delivery fee per transaction). These charges will add to the cost of your loan. Also, not all credit card issuers allow this option.
- Transfer a student loan balance to a credit card. Some credit cards allow student loan balance transfers, which could be beneficial if you qualify for an introductory 0% APR balance transfer offer. You'll have a period of months to pay off the balance interest-free, which could make sense if you know you can get rid of the loans you transferred in that time. But you'll need a good credit score, and in most cases, you'll pay a balance transfer fee—often 3% or 5% of the transferred amount, which you'll have to pay off alongside your previous student loan balance.
- Pay student loans using a cash advance. Your credit card issuer may allow you to get a cash advance on your credit line, either at an ATM in cash or via paper check. While you can theoretically use this money to make a student loan payment, cash advances come with high fees of 3% to 5% of the transaction amount and interest rates that can reach 29.99% or higher. Consider this option a last resort. There are many other, less costly ways to get relief from student loans, which we'll cover later.
Why You Shouldn't Pay Your Student Loans With a Credit Card
There are many reasons why paying student loan debt with a credit card can backfire. Here's why, for most people, it's not a good idea:
- Added fees: Student loan interest might sting, but it's very likely fees and interest charges from a bill pay service or cash advance will be even worse. Even using a balance transfer is risky, because in the event you can't pay off the balance before the 0% APR promotional period ends, your interest rate will skyrocket and you'll likely pay more interest than before.
- Effect on your credit score: Beyond the cost, it's also key to remember that increasing your credit card balance by paying student loans with a balance transfer can negatively affect your credit scores. As your credit card balance rises, so does your credit utilization rate, which is the total revolving credit you're using divided by your total credit limit. Credit utilization is the second most important factor in your credit score, after payment history. Experts recommend keeping credit utilization below 30%.
- Loss of loan protections: When you transfer a student loan balance to a credit card, you lose any consumer-friendly student loan repayment options you previously had, such as forbearance and forgiveness. For example, many federal student loan payments were paused for more than three years during the COVID-19 emergency. If you had transferred those loans to a credit card, you wouldn't have been eligible. Federal student loans come with many more benefits than private loans, but even private lenders offer ways to pause or reduce your payments if you're having trouble affording them.
Alternative Ways to Pay Off Your Student Loans Without a Credit Card
There are better alternatives to paying off student loans with a credit card. The best option for you depends on your motivation.
If you want to pay less interest, consider:
- Student loan refinancing: If you have good or excellent credit, you may qualify to refinance your student loans to a lower interest rate. Compared to transferring student loans to a credit card with a 0% intro APR period, you'll get more time to pay off your loans at the lower rate; plus, you won't pay a balance transfer fee. You'll also maintain some consumer protections, but since refinancing turns federal loans into private loans, you'll lose access to repayment options and benefits specific to federal loans.
If you're having trouble affording payments, consider:
- Income-driven repayment: This is the best option available to federal student loan borrowers who are concerned about affording their loans long term. Income-driven repayment plans limit student loan bills to a percentage of your discretionary income, as calculated by the government, and you'll also be forgiven any balance that remains after a certain number of years. Starting in July 2024, the newest income-driven plan, the SAVE plan, cuts monthly payments to 5% of discretionary income and the timeline for forgiveness to 10 years for many borrowers. Private loans generally don't offer income-driven repayment. But you can ask your lender about opportunities to reduce your interest rate or pay interest only for a period of time.
- Deferment or forbearance: Both federal and private student loans come with options for pausing payments temporarily. If your financial hardship will last a short time—while you're between jobs, say—you can apply for deferment or forbearance and get a break from student loan bills.
- Consolidation: Federal student loan consolidation is similar to refinancing in that it replaces multiple loans with a single new loan. But the goal isn't to get a lower interest rate. Instead, federal consolidation can extend your repayment term or make certain types of loans eligible for income-driven repayment, giving you a smaller monthly payment, and it lets you maintain access to federal loan benefits.
The Bottom Line
Paying student loans with a credit card generally isn't possible directly, and using a workaround like a third-party bill pay service or balance transfer can be costly and complicated. Instead, consider other ways to meet your student loan goals: lowering your monthly payment using income-driven repayment, for example, or cutting your interest rate with private loan refinancing.
If your motivation to pay off student loans with a credit card is to earn travel rewards, try other strategies, like picking the right rewards credit card and making use of shopping portals and rotating bonus categories.