Can I Use My Student Loans to Pay Off Debt Credit Cards?

Financial burdens and decisions can often be overwhelming, especially when it comes to the interconnected world of student loans, credit cards, and refinancing. While student loans are designed specifically for educational costs, credit card debts often creep up, leading many to consider various options for repayment. The temptation to use one’s student loan to alleviate this pressure is understandable but might not always be the wisest course of action. 

Below, we’ll dive into student loans, the ramifications of misusing them, and alternative pathways to manage and decrease credit card debt. By the end, you’ll be armed with the knowledge and resources to make informed financial decisions that serve your best interests.

What Are Student Loans Designed For?

At their core, federal student loans are meant to cover education-related expenses. This includes:

• Tuition and fees
• Room and board (either on-campus or off-campus)
• Books, supplies, and equipment
• Transportation (related to commuting to school)
• Dependent care and other related personal expenses
• Costs related to a disability
• Some loan fees

It’s important to remember that federal student loans come with specific terms and conditions regarding their use, primarily focused on supporting a student’s academic pursuits.

Using Student Loans for Credit Card Debt

Technically, paying off credit card debt is not an education-related expense. Thus, using federal student loans directly for this purpose could be considered a violation of the loan agreement. Misusing student loans can have consequences, including but not limited to:

• Loan Repayment with Interest: Student loans accrue interest. If you use these funds to pay off credit cards, you could end up paying interest on money that didn’t directly contribute to your education, potentially increasing the overall amount you owe in the long run.
• Potential Legal Ramifications: Misusing federal funds, even if it’s for debt repayment, can lead to legal consequences. If you’re found using student loans for non-education related expenses, you might face penalties or be required to repay the loan immediately.
• Loss of Financial Aid Eligibility: Misusing student loans can make you ineligible for future financial aid or other assistance programs.

Alternative Solutions

Rather than using student loans to pay off credit cards, consider the following alternatives:

• Debt Consolidation: This involves taking out a new loan to pay off multiple debts. If your credit card interest rates are high, a consolidation loan might offer a lower rate.
• Balance Transfer: Some credit cards offer low or 0% interest on balance transfers for a set period. Transferring your high-interest debt to one of these cards can give you time to pay down the balance without accumulating as much interest.
• Budget and Payment Plan: Create a strict budget to allocate more funds toward paying off credit card debts. Reach out to your credit card company and discuss a feasible repayment plan.
• Seek Financial Counseling: Consult a financial advisor or credit counselor. They can offer tailored advice and strategies for managing your debt.
• Credit Card Debt Refinancing: Another avenue to consider is refinancing your credit card debt with a dedicated refinancing loan. Refinancing allows you to replace your high-interest credit card debt with a more manageable single payment. This not only streamlines your finances but can also save you money in the long run. Ensure to shop around and compare options to find the most favorable terms.

Why Refinancing Credit Card Debt is a Better Option

Refinancing credit card debt stands out as a more advantageous approach compared to using student loans to manage this burden. When you refinance, typically through a personal loan or a balance transfer to a card with a lower interest rate, you can lock in a fixed, often lower, interest rate. This can lead to substantial savings over the life of the debt, especially when compared to the compounding interest rates of credit cards. 

In contrast, while student loans may seem like an easy solution, they come with their own set of strings attached. They’re primarily designed for educational expenses, and using them otherwise can lead to potential legal ramifications and may jeopardize future financial aid eligibility. Additionally, student loans accrue interest, which means you might simply be swapping one debt for another, potentially more expensive, debt in the long run. 

Refinancing, on the other hand, offers a clear and focused solution for credit card debt without the complications and potential pitfalls associated with misusing student loans. Below, you will find our top picks for the best personal loans to refinance your credit card debt.

6 Best Personal Loans to Refinance Credit Card Debt

When it comes to credit card refinancing, there are many lenders in the market who offer diverse interest rates, loan terms, and minimum credit score requirements. But some lenders stand out from the pack. Here are our top picks for credit card refinancing:

1. AmOne (Best for Okay to Good Credit Scores)
2. Spotlight Loans (Best for Bad Credit)
3. Spring Loans (Good for Bad Credit)
4. First Premier Lending (Best for Bad Credit)
5. Upgrade (Best for Quick Disbursement)
6. RefiJet (Best for Lower Credit Scores)

Read on to learn more about each of these refinancing lenders!

1. AmOne (Best for Okay to Good Credit Scores)

AmOne is a notable player in the debt refinancing sector, particularly for credit card debt. By efficiently connecting borrowers with suitable refinancing options, AmOne helps individuals consolidate and manage their credit card balances more feasibly.

Check rate on website

on website

AmOne Personal Loan

4.5

Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.

Min. credit score

600

Fixed APR

3.99%-35.99%

Variable APR

N/A

View details

Overview

• Minimum credit score: 600.
• Fixed APR: 3.99%-35.99%.
• Loan amounts: $1,000 to $50,000.
• Repayment: 1 to 7 years.

Qualifications

• Must be at least 18 years old.
• Must be a U.S. citizen or permanent resident.
• While there’s no specific income requirement, a consistent source of income is essential for the applicant.

Pros

• Suitable for individuals with lower credit scores.
• No cost for the matching service.
• Attractive loan rates.

Cons

• Acts as an intermediary, not a direct lender.
• Risk of multiple contacts from prospective lenders.
• Lack of clarity on lender details.

2. Spotlight Loans (Best for Bad Credit)

Spotlight Loans is a personal loan provider that aims to offer financial solutions to individuals seeking to manage unexpected expenses, consolidate debt, or fund personal projects. While specific details and consumer reviews may be limited, such lenders typically emphasize quick loan approval processes, flexible repayment terms, and accessibility for a wide range of credit profiles, making them a potential option for borrowers looking for immediate financial assistance.

Check rate on website

on website

Spotlight Loans

4.8

Stilt rating

Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.

Min. credit score

None

Fixed APR

6.63% and up

Variable APR

N/A

View details

Overview

• Minimum credit score: n/a
• Variable APR: 4.99% and up
• Loan amounts: $100 – $5,000
• Repayment: Depends on choice of lender

Qualifications

• Be 18 years of age or older
• Have a checking or savings account
• Have regular income
• Have a fair credit rating

Pros

• Spotlight Loans is willing to work with individuals who have less-than-perfect credit, making it a viable option for those who may struggle to secure loans from traditional lenders​​​​.
• Spotlight Loans offers same-day approval and funding, which is beneficial for those in urgent need of funds. This makes it a good option for emergency financial situations​​.
• Unlike traditional payday loans, Spotlight Loans provides the option to repay the loan over a period of months, offering more flexibility in repayment planning​​​​.

Cons

• One of the most significant drawbacks of taking a personal loan with Spotlight Loans is the potentially high interest rates. With APRs that can be much higher than traditional personal loan lenders, this can lead to substantial interest payments over time​​.
• Spotlight Loans offers loan amounts that are relatively low, which may not be sufficient for all borrowers’ needs​​​​.
• Spotlight Loans services are not available in all states, so it’s important to check if you reside in an eligible location before applying​​.

3. Spring Loans (Best for Bad Credit)

Spring Loans offers a comprehensive range of refinancing solutions tailored for credit card debt. Recognized for their flexible terms, they provide individuals with the means to potentially reduce their interest rates and monthly payments, simplifying financial management.

Check rate on website

on website

Spring Loans Personal Loan

4.2

Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.

Min. credit score

None

Fixed APR

27.00%

Variable APR

N/A

View details

Overview

• Minimum credit score: None.
• Fixed APR: 27.00%
• Loan amounts: $3,000.
• Repayment: 48 months.

Qualifications

• Demonstrate a recurrent income.
• Minimum age prerequisite: 18 years.
• Validate U.S. citizenship status with an SSN.
• Provide a legitimate U.S. driver’s license or a state identity card.
• Establish a functional bank account for incoming deposits.
• Adhere to any specific demands by the loan provider.

Pros

• Open to applicants with any credit background.
• Four-year loan period aids in structured financial management.
• The $3,000 offer addresses several short-term financial challenges.
• Wide-reaching eligibility criteria invite a broad spectrum of applicants.
• The focus on dependable income over job title benefits varied income sources.

Cons

• The set 27% APR is higher than many alternatives.
• Restriction to a $3,000 loan might not cover all financial outlays.
• Possessing specific IDs is mandatory, sidelining some applicants.
• A prerequisite for an ongoing bank account may limit certain users.

4. First Premier Lending (Best for Bad Credit)

First Premier Lending specializes in customized refinancing solutions. Understanding the specific challenges of credit card debt, they offer a range of refinancing choices that can help individuals streamline their finances and work towards debt freedom.

Check rate on website

on website

First Premier Lending Personal Loan

4.2

Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.

Min. credit score

None

Fixed APR

27.00%

Variable APR

N/A

View details

Overview

• Minimum credit score: None.
• Fixed APR: 27.00%.
• Loan amounts: $3,000.
• Repayment: 48 months.

Qualifications

• Maintain a consistent source of income.
• Must be at least 18 years of age.
• Possess valid U.S. citizenship and a legitimate social security number.
• Hold a current U.S. driver’s license or state-issued ID.
• Keep an active bank account for direct deposit.
• Satisfy any lender-specific criteria, such as credit rating, borrowing history, or place of residence.

Pros

• No minimum credit score requirement allows accessibility for those with varied credit histories.
• 48-month term provides clarity and allows for long-term financial planning.
• Specific loan amount of $3,000 can meet many short-term financial needs.
• Broad set of qualifications make the loan accessible to a wide range of people.
• Emphasis on consistent income, not necessarily employment type, allows flexibility for borrowers.

Cons

• A fixed APR of 27% is relatively high.
• Loan amount is capped at $3,000, which might not cater to larger financial requirements.
• Requirement of a U.S. driver’s license or state-issued ID could exclude some individuals.
• Mandatory active bank account could be limiting for those who are unbanked.

5. Upgrade (Best for Quick Disbursement)

Upgrade provides transparent and straightforward refinancing options for credit card debt. With competitive rates and clear terms, they aim to be a top choice for individuals looking to consolidate and refinance their existing balances.

Check rate on website

on website

Upgrade Personal Loan

5.0

Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.

Min. credit score

560

Fixed APR

8.49% - 35.99%

Variable APR

N/A

View details

Overview

• Minimum credit score: 560
• Fixed APR: 8.49% – 35.99%
• Loan amounts: $1,000 to $50,000
• Repayment: 3 to 5 years (7 years on some larger loans)

Qualifications

• Possess an active bank account.
• Able to provide a legitimate email address.
• Minimum age requirement: 18 years (19 for Alabama residents).
• Credit score of 600 or higher.
• Annual income of $25,000 or more.

Pros

• Willing to accommodate borrowers with a credit score as low as 560.
• Offers flexibility with a range of loan amounts from $1,000 to $50,000. This can be suitable for both small and large financial needs.
• Provides options for repayment, allowing borrowers to choose a timeline that best suits their financial situation.
• Once approved, borrowers can access funds in just one day, which is useful for urgent financial needs.

Cons

• Origination fees can go as high as 9.99%, which might add a significant cost to the loan.
• Apart from the origination fee, there are fees for late payments and failed payments, which can add up if one is not careful.
• While there is an option to extend repayment for larger loans up to 7 years, it’s not standard for all loan amounts.

6. RefiJet (Best for Lower Credit Scores)

While primarily known for auto refinancing, RefiJet’s commitment to transparent and adaptable lending could be beneficial for those exploring diverse options for credit card debt refinancing. Borrowers might consider checking with them to see if they’ve expanded their services to cater to this specific financial need.

Check rate on website

on website

RefiJet Refinancing Personal Loan

3.5

Stilt’s lender ratings reflect the findings and opinions of our editorial staff. Our scoring methodologies consider a wide array of factors and data points for every lender, offering, and financial solution.

Min. credit score

550

Fixed APR

4.54-21.99%

Variable APR

N/A

View details

Overview

• Minimum credit score: 550.
• Fixed APR: 4.54-21.99%.
• Loan amounts: $5,000-$100,000.
• Repayment: 24-84 months.

Qualifications

• A FICO credit score of at least 550 is required.
• Credit history requirements differ among lenders.
• The minimum annual gross income is set by individual lenders, with $30,000 being the lowest known requirement.
• The debt-to-income ratio should not exceed 60%.
• Applicants should have no open or discharged bankruptcies in the last 12 months.
• Services are accessible in all 50 states.

Pros

• Pre-qualification is possible using a soft credit inquiry.
• Automatic payment can lead to rate discounts with certain network lenders.
• Services span across all states.
• Customer support is accessible on Saturdays.
• The website features a Spanish version.

Cons

• An origination fee up to $395 may apply.
• A fully online application process isn’t offered for those who desire it.

Final Thoughts

Using your student loans to pay down credit card debt will rarely, if ever, be a good idea. Refinancing, however,  might offer a silver lining for many dealing with high-interest credit card debts, providing relief and a clearer path forward. But remember, while solutions abound, the most effective approach is always rooted in informed decisions and proactive financial planning. As you embark on your journey towards financial freedom, take with you the insights from this guide and remember that every step, no matter how small, takes you closer to your goals.

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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