Debt Free Climb

One Millennials journey from debt to debt free

Paying off your Federal Student Loans using a Credit Card

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Update: Starting on 1/1/2017 Great Lakes Student and Navient Loans will no longer accept Credit Card Payments :(.

However, you can still make payments via “Pre-Paid” Credit Cards. Meaning you can buy Visa or Master Card Gift (debit) Cards with your Credit Card and Pay your Student Loan balance with the “Pre-Paid” Credit Card. Note: Pre-Paid Credit Cards generally have a small fee.

Disclaimer, paying your loans via credit card takes monthly planning and self-discipline. Do not start paying off your loans via Credit Cards if you can’t afford to pay off the card (in full) immediately after the credit card charge posts (treat as a debit transaction).

A little-known fact is that you can pay your federal student loans for Navient and Great Lakes loans via your credit cards. Paying Student Loans via Credit Card is a strategy I started in early 2016 and is perfect for achieving more rewards or cash back in the Student Loan payment process.

Every 15th of the month the minimum Student Loan charges come out of my bank account. I have an alert on my phone reminding me to call my student loan provider (Currently Great Lakes) to make my additional one-time a month payment via credit cards.

Make the Call!

  1. I call the provider and talk to a rep. Say “Hi, I would like to make a one-time payment via Credit Card, can you assist?”
  2. Give credit card info, Payment amount, and the particular Loan account you want the payment to count towards Following the Avalanche method to attack highest interest debt first. (See the how to pay off your student loans efficiently post here)
  3. The rep confirms payment and provides confirmation email. Typically takes 2-3 days to post and reflect on balance fully.
  4. Once payments post on my credit card statement, I immediately pay it off. Treating it similar to a debit transaction.

The phone call lasts less than 5 minutes, and you can end up gaining extra cash back, points, or miles depending on your credit card perks.

*To avoid a fee see the Navient instructions below*

Credit Card Perks!

So far in 2016 I have paid over $7k of my student loans via my travel credit card. For my $7k spend I am receiving 7k reward points/miles. One option is to convert to cash which would be about $70. Another option is if you have a travel credit card that allows you to transfer to airline partners. By moving points to travel partners you can get move value than a 1:1 cash back ratio. As a result, I was able to transfer ~7k points to Southwest Airlines miles, which paid for my round trip ticket from Austin to Denver for a weekend getaway with my girlfriend. I think the 5min phone call every month is worth the free flight, don’t you?

Q/A

Why would anyone pay debt with credit?

Simple, to kill two birds with one stone. Paying via Credit card a good way to reach credit card minimum spend as many of the sought after travel credit cards have a $3k to $4k minimum spend requirement. Typically you won’t gain more than the 1x point per dollar spent on a Student Loan payment. However, if you are making “bulk” payments the amount of credit card rewards can add up quickly.

Which Loan Companies accept Credit Card Payments?

If you have loans with Navient or Great Lakes for student loans, I recommend exploring this route. Other Loan providers such as Nelnet or Myfedloan don’t currently offer Credit Card payments.

If there are any other Student Loan Companies that you know, accept credit card payments let me know in the comments.

Great Lakes – You can make an additional Credit Card payment (on top of minimum payments) via phone for no charge :).

Navient – This is slightly more of a pain but is possible.

You can only pay the amount due only. If you request payment by talking to someone, Navient charges a $14.95 fee. However, the fee is waivable if you ask the rep to waive it. If the rep doesn’t waive the fee, I recommend not to pay, hang up and try a new rep.

The difference between Great Lakes and Navient is, for Navient you can only pay the amount due each month via credit card. A workaround is to call Navient beforehand and request your minimum monthly payment increased to the amount you can afford to pay off each month. This way you can make your monthly payment and get the credit card benefits.

Have you explored different ways to pay off your student loans? If so, what type of rewards have you gained?

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