There are millions of students paying student loans for the courses they are pursuing. Some of these students may even be paying student loans with credit cards. While, technically, it is definitely a possibility, there are many different aspects to consider.
Foremost among them would always be the fact that paying one debt with another often leads to a sticky situation. However, that does not mean that paying student loans with credit cards is always a bad idea.
With that said, let us look at all the different aspects to consider as far as student loans paid with credit cards are concerned. Continue reading to learn more about this.
Credit Cards Offer Rewards
Outstanding student loan debt has soared to a staggering $1.41 trillion in 2019. There are millions of students out there who have taken out student loans. Across the United States and beyond, soaring tuition fees have meant that more and more students are availing loans to fund their academic pursuits.
Against this backdrop, routine student loan repayment offers no benefit per se; you simply pay back what you borrowed, with interest. Naturally, credit cards come across as an attractive proposition in such a scenario. This is because credit cards offer benefits such as reward points, the concierge services, memberships to various places, etc.
So, if you pay your student loans with a credit card, you may be able to reap some of these benefits in the process.
There Are Few Options For Paying Student Loans With Credit Cards
As far as avenues for paying student loans with credit cards is concerned, they are relatively few. For instance, if we look at primary student loan services like EdFinancial and Nelnet, there is no option to pay your student loan with credit cards; you have to pay from your bank account.
However, these are not the only options as far as student loan repayment is concerned. There are other choices available to you, as well.
Private Student Loan Borrower
A private student loan borrower would be an ideal proposition for paying student loans with credit cards. Essentially, this would be an entity that would borrow the student loan on your behalf. You would then repay back the borrower with your credit card.
This is an arrangement that can work out quite smoothly while fulfilling your keenness to pay your student loan with a credit card. Yes, you need to ensure that the academic or loan institution in question actually allows this.
Ability To Repay Credit Card Debt In Full
This is perhaps the most important aspect by far when it comes to student loans paid with credit cards. You must have the ability to repay your monthly credit card bill in full, not just the minimum amount – and certainly, not nothing at all! Otherwise, there is simply no point at all in going for this option as you will just drown in debt doing do.
Remember that your student loan is a debt in itself; when you use your credit card to pay for it, you are simply using one debt to pay another – the proverbial ‘borrowing from Peter to pay Paul‘. The likely reason you are keen on using this option is to make use of the benefits it offers, be it flexible payments, reward points, concierge services, and more.
Unless you fulfill the earnest need to pay your credit card bill in full at the end of each billing cycle, these benefits will simply pale in comparison, which brings us to the last point mentioned below.
The Trade-Off Between Credit Card Benefits And Student Loan Repayment
As we mentioned at the end of the previous point, the whole exercise has to be worth it. Since student loans do tend to be substantial sums, when you pay them with credit cards the benefits, in terms of reward points, you will accrue will also be significant.
Yet, you must evaluate the entire trade-off well. You should especially focus on ensuring that you have adequate provisions for repayment. In the initial stage, if your parents or anyone else is willing to help you out, don’t hesitate. Otherwise, the burden of debt will simply be overbearing.