Can You Pay a Student Loan with a Credit Card? Here’s What to Know

Whether you're struggling to pay your student loans or simply want to rack up rewards, you might want to know — can you pay a student loan with a credit card? In almost all cases, loan servicers and lenders don't accept credit card payments directly. There are some ways you may be able to use a credit card for loan payments indirectly, but it's not recommended for a variety of reasons. Find out more and what student loan repayment alternatives to consider.

Can you pay student loans with a credit card?

You can't pay federal student loans with a credit card because of federal regulations. Private lenders typically follow the same guidelines, but some may allow it. In general, you must use money from your bank account to make payments on your student loans — either electronically or by check. But there is a way to get around this.

It's possible to use Plastiq or other third-party payment services for loans in exchange for transaction and delivery fees. These fees negate any potential rewards and there are added risks.

“You might also end up paying interest twice if you miss a credit card payment — once on the student loan, and again on the credit card balance, driving higher overall costs.” says David Green, CEO at Earnest, a private student loan and student loan refinancing lender that does not allow credit card payments.

Current student loan refinance rates

Pros and cons of using a credit card for student loan payments

You can pay a student loan with a credit card if using a third-party service. While that's one way to circumvent the restrictions, it's not something you should jump into lightly. Be sure to carefully evaluate the pros and cons of using a credit card for student loan payments before doing so.

Pros

Earn rewards

If you have a rewards credit card, paying a student loan with it can help you maximize your rewards. Whether you're earning cash back or points or miles, paying a student loan with a credit card can boost your earnings.

While you can increase your rewards, the value will probably get eaten up by the cost of transaction fees. A better way to use your rewards is to earn cash back on regular purchases and put the extra funds toward your student loans.

Meet spending minimums

The top rewards credit cards on the market typically have enticing welcome bonuses. But to qualify for them, you typically need to meet a spending minimum of several thousand dollars in a short timeframe.

That can be tough with your regular spending. Paying a student loan with a credit card may help you easily meet those spending minimums so you can cash in on the bonus. However, there's a caveat. You generally need excellent credit to be eligible for these types of cards and they typically come with an annual fee.

Save interest with 0% APR

If you want to pay a student loan with a credit card, a 0% APR credit card could help. These credit cards offer 0% APR for a specific amount of time as part of the introductory or promotional period.

So if you paid your student loans with a 0% APR credit card and then paid off the balance in full during the introductory period, you could save money on interest. But you're still on the hook for the transaction fees when using third-party payment services for loans and you should proceed with caution.

“In dire situations, 0% credit cards can be a great tool. It gives you a window of opportunity to pay down debt without interest. But you have to be educated. Lenders offer 0% interest for a period of time, usually 12 to 18 months, and then it kicks back in. So they aren't a long-term solution,” says Crissi Cole, founder and CEO at Penny Finance, a digital financial planning platform with a mission to close the wealth gap.

More options

When you make a student loan payment, you typically have one option — to use your bank account. If you choose to pay a student loan with a credit card, you have far more options. If you're rewards-savvy, you can select the credit card that would work best for your goals and needs. As noted above, you can also see if you qualify for a 0% APR credit card.

Cons

High transaction fees

Using third-party payment services for loans such as Plastiq can be convenient but comes at a cost. Plastiq has transaction fees for card payments at 2.9%. Additionally, the company has delivery fees for ACH/EFT/Electronic of $0.99.

So there's no getting around the extra cost. If you're using a credit card to get more rewards, these fees reduce your overall earnings. If you want to use credit because you don't have cash in the bank, this can add to your total costs.

Higher APRs

If you pay student loans with a credit card and don't plan to pay off the balance before your due date, you'll get hit with interest charges. Credit cards have much higher APRs than student loans and may be variable and subject to changes.

The average APR on all credit card accounts stood at 21.76% as of August 2024, according to the most recent Federal Reserve data available.

Interest rates on federal loans are fixed and are much lower. Current rates are between 6.53% and 9.08%. This is why it rarely makes sense to pay student loans with a credit card.

Loss of federal loan benefits

If you pay off your entire federal student loan balance and put it on a credit card, you'll lose out on some important benefits. For example:

• Income-driven repayment (IDR) plans
• Public Service Loan Forgiveness (PSLF)
• Deferment
• Forbearance
• Payment pauses, like during the COVID emergency

These protections can't be understated and could be a huge benefit.

“Student loans, both private and federal, do come with forbearance provisions, and federal loans offer a variety of payment plans, none of which are offered on a credit card,” says Jack Wang, wealth advisor and college financial aid advisor at Innovative Advisory Group.

On top of these payment benefits and protections, you could be missing out on tax benefits as well, whether you have federal or private student loans.

“A borrower with a student loan may be eligible to take the student loan interest tax deduction, based on their income,” says Wang. “But if they refinance the student loan onto a credit card, the interest is no longer deductible as the credit card was not a loan used, originally, to pay for qualified education expenses.”

Impact on credit utilization and credit score

If you pay a student loan with a credit card and charge a significant balance, it will increase your credit utilization, which can reduce your credit score. The amount you owe is a significant factor, making up 30% of your FICO credit score.

“To maintain the health of your credit, it's best practice to utilize 30% or less of your total credit limit,” says Cole. “This can easily get out of hand if the habit becomes using your credit card to pay other debts. High credit utilization equals more dings in your credit score.”

Alternatives to paying student loans with a credit card

If you're looking to pay student loans with a credit card because you're struggling financially, you have other options that are safer and offer more benefits. Here are some better student loan payment alternatives.

• Income-driven repayment (IDR) plans. If you have federal loans, you may qualify for as little as $0 monthly payments on an income-driven repayment plan. When you go on an IDR plan, your monthly payments have an upper limit in place. Typically, they don't exceed around 10% to 20% of your discretionary income. Additionally, all IDR plans offer student loan forgiveness if you have a balance after 10 to 25 years, depending on the plan.
• Deferment or forbearance. If you're unemployed, experiencing economic hardship, or in cancer treatment, you may qualify for a deferment or forbearance that allows you to pause your payments.
• Refinance student loans. If you have excellent credit and a stable income, but your monthly payments feel overwhelming, student loan refinancing may help. When you refinance, you may be eligible for a lower interest rate and change your repayment term. Federal loan borrowers should exercise caution though as refinancing pays off your current loans, which means you'd no longer qualify for programs like IDR or student loan forgiveness.