Do You Earn Rewards Paying Student Loans?
Servicers do not take cards directly
Federal and most private student loan servicers accept bank transfers, not credit cards, largely because the card processing fee would eat their margin. So there is no way to simply run your monthly payment through a rewards card and pocket the points. The mechanics resemble other bills that dodge cards, like a car loan payment.
Third-party services charge a fee
A service like a bill-pay intermediary will charge your card and send the servicer a bank payment, but it adds a fee around 3 percent. Since a typical card earns 1 to 2 percent, you pay more in fees than you earn in rewards on nearly every card. Value your points at a flat 1 cent and the math rarely works.
When it can make sense
The one scenario worth the fee is meeting a large welcome-bonus spending requirement you could not otherwise hit, where the bonus dwarfs the fee. Outside that, focus your rewards effort on everyday spending and pay loans by free bank transfer. Students building credit can start with the right card from our best student cards guide, and tuition itself is covered in paying tuition with a credit card.
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