Student loans are often inevitable, especially for physicians, dentists, and veterinarians who often take on a considerable amount of debt in order to get through school and training. The thought of repayment can feel daunting—not knowing where to begin or what your options are.

While there are a variety of different ways one can tackle student loan repayment, is it advisable (or even possible) to pay off your loans with a credit card?

We did the research and while there can be benefits to paying off your student loan debt with a credit card, the pros do not outweigh the cons for most. Here’s what you need to know.

Can you pay student loans with a credit card?

Whether lacking the cash on hand to pay your monthly student loan payment or wanting to earn the rewards associated with using a credit card, you may be considering using a credit card for your student loan payments.

Generally speaking, you can’t use a credit card directly to pay off federal student loans, but you may be able to for certain private student loans if you are in a bind. Keep in mind however, if you do use a credit card to pay your student loans, there are many downsides including the fees may counteract any points you may earn.

Federal Student Loans

Though federal loans cannot be paid directly with a credit card, there are third-party services that allow you to use a credit card. These services charge your credit card for the amount of your student loan bill (plus a fee), and then send payment to your student loan servicer.

That being said, the additional processing fee associated with this payment method may negate any rewards you would gain. Additionally, while possible, it is not advisable to pay your federal student loan with a credit card as interest rates are often significantly higher than federal student loan interest rates. With the average credit card interest rate being 27.70% in 2024, federal student loan interest rates are often offered at a fixed rate with the average rate being between 5.50% to 8.05%.

Private Student Loans

Private student loans lend more flexibility when it comes to potentially accepting credit card payments. In order to find out if your private student loans are payable by credit card, check your payment options in the lender’s online portal or contact your lender directly.

While private student loans don’t typically offer fixed interest rates in comparison to federal student loans, the average interest rate for private student loans is still considerably lower than a credit card with the average in 2024 being between 7.85% to 8.89% depending on your credit score and the length of loan.

Risks of using a credit card for student loans

While using credit cards for student loans could be more convenient and flexible or help you earn rewards points, those advantages generally aren’t worth the risks of using this payment method for your student debt. There are many cons to using credit cards to pay student loans including:

• High-interest rates on credit cards: As previously stated, interest rates on credit cards are often significantly higher than the average student loan interest rate.
• Impact on credit score: The rule of thumb on building good credit is to use less than 30% of your credit card limit. If you are maxing out your credit card(s) and only paying the minimum monthly, your credit score will suffer.
• Risk of accumulating more debt: Due to credit card interest rates being higher than student loan interest rates in most cases, not only will this hurt your credit score, but you will also be tacking on upwards of 28% onto your existing debt; only worsening your debt load.
• Fees associated with third-party payment services: In addition to a higher credit card interest rate, you would be adding 3% to 5% more to your debt load with the third-party service fee.
• Loss of borrower protections and benefits associated with federal loans: When trading your loan payment for a credit card payment, you are also waiving your federal student aid benefits offered such as income-driven repayment plans or loan forgiveness.

Alternative options to using a credit card for student loans

Paying student loans with your credit card to earn rewards or because you are in a jam won’t be beneficial in the long run and should generally be avoided. If you are considering using a credit card because you don’t have the cash on hand to cover your monthly bill, know there are other options for paying. Here are four options to consider.

1. Refinancing student loans

If your student loan payments are more than you can afford, refinancing can be a good alternative to paying off student loan debt. However, take into account that if you refinance your federal student loans into private student loans that you will no longer qualify for loan forgiveness.

2. Income-Driven Repayment (IDR) plans

There are four IDR plans offered through Federal Student Aid, which can lower the monthly payment of federal student loans. Each of these repayment plans determine your monthly payment based on a percentage of your discretionary income and vary in repayment length (in years). Using IDR could lower your monthly payment to an amount that you are able to pay without relying on a credit card.

3. Loan forgiveness programs

Public service loan forgiveness (PSLF) forgives your remaining balance after making 120 monthly payments. To qualify for PSLF, you must be enrolled in an IDR plan, which could lower your monthly payment.

4. Budgeting and financial planning for loan repayment

We get it, debt can quickly become mentally taxing. Don’t let your debt overwhelm you. By being proactive and making a budget that includes your student loan payments, you can avoid not having the funds for your bill. Find tips for budgeting here.

So, can you pay student loans with a credit card?

Ultimately, yes, you can pay off student loan debt with a credit card though in very specific and limited instances and it isn’t recommended if it can be avoided. Here at Panacea Financial we understand that doctors have unique financial needs. We are doctor founded, expert-driven and strive to provide accessible service for those who in turn care for us.

We want to help you make the right decision for your student loans and your financial needs. That’s why we have a library full of doctor-specific articles about everything from student loan forgiveness to saving for retirement. Find them on our Resources page or check out our curated picks here:

• You’re Not Alone: Many Doctors Need Help Navigating Student Loan Debt
• Pros & Cons Of Refinancing Student Loans
• Do Student Loans Affect My Ability To Buy A Practice?
• Guide To Repaying Private Or Refinanced Student Loans