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Can I pay my Student Loans with my Credit Card?

Paying student loan bills with a credit card has advantages, but it is tricky to get a student loan lender to accept a credit card payment.

Written By: Michael P. Lux, Esq.

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Paying off student loans with a credit card might seem like an ideal solution for many borrowers.

Repaying student loans with a credit card can have two major benefits:

  1. Earning Rewards: By using a credit card, borrowers could quickly accumulate rewards and points, which can be valuable for travel, cash back, or other benefits.
  2. Saving on Interest: Utilizing a credit card that offers a 0% introductory rate can provide substantial savings on interest payments, especially if the balance can be paid off before the introductory period ends.

Unfortunately, student loan lenders are not very accommodating. Instead of being willing to pay merchant fees, they require borrowers to make payments via a check or bank transfer.

Unfortunately, many student loan servicers do not accept credit card payments directly due to the merchant fees involved. They typically require payments to be made through checks or bank transfers, which can be a significant limitation for those looking to leverage credit card benefits.

Despite this challenge, borrowers have a couple workarounds to consider.

Work with a payment processing company

Companies like Plastiq enable borrowers to use credit cards for their student loan payments.

The process is relatively simple. The borrower provides Plastiq with the lender’s details. Plastiq charges the borrower’s credit card. It then uses those funds to pay the lender directly.

Plastiq makes its money by charging a transaction fee. At the time of writing, this fee is 2.9%. This means Plastiq will charge the borrower’s credit card $102.90 for a $100 payment to the lender.

Because of the high transaction fee, this approach usually doesn’t work for borrowers looking to earn rewards. Most credit cards offer a maximum reward rate of about 2%. In the case of Plastiq, this approach would result in a net loss of at least 0.9%. However, borrowers working towards a sign-up bonus with a credit card company might find this approach worthwhile. If the student loan payment helps meet the minimum spending requirement, it could make the transaction fee money well spent.

When using this strategy, you should keep a couple of considerations in mind.

  1. Reputation: You should be certain you are working with a reputable company. The last thing you want is to be charged for the payment and the money not end up with the lender.
  2. Timing: Make sure you start the payment process well in advance of your student loan payment due date. A processing issue could cause the wrong account to be credited or cause a delay and a late fee.

Convince your lender a credit card is the only way they will get paid

The problem with making credit card payments towards student loans isn’t that lenders can’t process credit card payments. The issue is that they don’t want to.

Instead of making a payment through the typical payment portal on the student loan website, call in and ask to make a credit card payment. Explain that payment via credit card is the only way you will be able to make your payment at the moment.

Borrowers who have fallen behind on payments and are now getting serious about their student debt will have the best chance of success with this approach.

When you call, it is helpful to ask the representative whether or not they have the authority to accept and process credit card payments. If they are not permitted to do so, ask to speak to someone who does.

Keep in mind, lenders differ in how they handle these requests, so the outcome can vary significantly from one lender to the next. This method requires persistence and may not always work, but it can be a viable option in certain situations.

Credit Card Payments for Student Loans are Risky

Borrowers considering using credit cards to pay off student loans should weigh the potential benefits against the risks carefully.

The best-case scenario from this approach might be a small net gain of 1-2%. While every little bit helps when it comes to student loan repayment, the gains from using a credit card could be minimal as compared to the risks.

Borrowers taking advantage of a 0% introductory interest rate should be especially careful. Once the introductory period ends, the interest rate jumps up to the “regular” interest rate. This rate could easily be more than 20%. That is a financial time bomb. To avoid this pitfall, anyone using the 0% interest rate to pay down student debt should be certain they can pay off the full balance before the promotional rate expires.

If your strategy involves continually transferring balances to new cards to maintain a 0% interest rate, then this approach is inadvisable. This strategy involves juggling multiple accounts and deadlines, and a single misstep could result in high interest charges. It’s generally just too risky and not worth doing.

Another factor to consider is the tax implications. Credit card interest cannot be deducted, but student loan interest can. If the numbers are tight, this difference could make using a credit card less financially advantageous than it appears.

Final Thoughts

Using a credit card to pay off student loans might seem like a clever strategy on paper, but in practice, it often falls short.

While there are specific situations where it might make sense, generally speaking, the complications and risks associated with this approach tend to outweigh the benefits. The effort to manage this method—keeping track of interest rates, handling balance transfers, and dealing with potential tax implications—can make it a less appealing option. For most borrowers, simpler and safer repayment strategies are usually more advisable.

About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

12 thoughts on “Can I pay my Student Loans with my Credit Card?”

  1. Sallie Mae will actually accept credit card payments over the phone but, only up to the minimum monthly payment. And you can only make a credit card payment for the current month. You have to wait another 30 days to make the next credit card payment. You cannot make a big payment or pay it off completely with a credit card. So it depends on the value of the airline miles or hotel points that you earn through the credit card, versus the interest that Sallie Mae charges for maintaining the loan.

  2. It wouldn’t make sense to pay with your credit card because that has a greater interest rate than you student loans without the tax deductions. But if you had a 0% introductory card you could. You can set up a paypal account and send yourself an invoice, pay the 2% or whatever it is processing fee for credit card transactions, and then send the deposit you just made in your checking account to your student loan. It’s a few added steps but if you have a 0% introductory rate it would make perfect sense, especially if you are paying 6.85% right now on your loans. So yes you can do it!

    • Can you give me more information about how to do this???? I have 0% interest credit card that I want to transfer my current student loans to. It would save me about 700 towards interest. The loans are through Sallie mae and they won’t take credit card payment. How do I use paypal….???Thank you!

      • I don’t know about paypal, but will your credit card company let you write a check against your credit card? My credit card company once sent me a sheet of checks that I could write and the money spent would just be added to my credit card balance… just watch out for fees associated with this move.

    • For a minute there I just thought you broke the space time continuum, and I actually attempted a small invoice payment to myself just to see… If you invoice yourself for $10 through PayPal and pay it with your credit card, you are going to receive $9.41 in your account (Losing 6% to paypal) and surely if you did this with a larger amount on a credit card not only would you be stupid (again…6%) but surely the credit card will not be happy about having their cash advance fee going to paypal instead of them

  3. I was thinking of it more from the perspective of transferring all or a portion of a SL balance to a credit card with a zero interest promotional period, then pounding away on that interest free and paying the transferred part off within the promotional period.

    • Interesting idea… you would have a pretty hard time getting any lender to accept a large payment via credit card, but if you could, it would be a pretty savvy move… assuming you got it paid off before your 0% promo period ended.

  4. Same with a mortgage payment and a car payment — credit cards not accepted for regular payments. But you can set up automatic CC payments for most or all of your utility bills. I rack up a lot of cash back via my 1% Amazon card and 2% Amex.

  5. One of my student loan lenders offers a credit card option but there is a fee tacked on of course. I agree with the previous comment ThankYou points are probably the best thing I’ve seen so far. I signed up for the Citi promotion for their checking and credit card account and wound up with over 75,000 TY points. That’s $750 to put towards student loans! Not earth shattering but it’s $750 I won’t have to spend myself.

    They have TY point promotions pretty often so it’s worth checking out.

  6. Ha! I’ve researched this idea to wits end! I don’t know if anything has changed in the years since I paid off my student loans but at the time, I couldn’t find anything. I was able to use my Thank You points towards my student loans though. I used one credit card for all of my spending and then would get a check sent to my student loan company when I would redeem the points. The ratio wasn’t the best, 10,000 points for $100. I would make it a point to get bonus point by shopping online, etc. I think in total I was able to get close to $400 towards my student loans.

  7. I’m super bummed about this one — they really want there cold hard cash. I WOULD be able to fulfill my dream of traveling the world if I could pay my loans with my rewards credit cards.


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