Earned 100,000+ Points Paying Navient Student Loan with Credit Card

[doc01]

sorry if this has been posted previously,  but I wanted to share the way I paid Navient student loans and earn points.

Short story: left residency with $100K in loans. Navient repayment was $535/month over 30 years @3.5%. I'm a WCI so no thanks.  Started practice, Saved $60K first year and direct debit to navient cutting my loan down to $40K. It angered me that I just paid $60K and didn't get anything for it. So I found it is possible to pay navient with a credit card for your amount due.

Disclaimer: obviously this would be a terrible idea to switch your loan from a low interest student loan to a high interest credit card. I saved the $40K to pay off the remainder of my loan prior to even considering paying via credit card.  I would NOT have tried this if I didn't have the full student loan payment balance in my savings account.

Important note: you can only pay the monthly payment due to navient via credit card over the phone in their automated system. (you can not pay $40K at once via credit card, only the amount due that month) So the important step was calling navient at 888-272-5543 during business hours and talking to a agent and getting the terms of my loan changed to an 8 month repayment plan at $5K a month. (it was pretty easy they don't ask too many questions if your trying to increase your payment) Therefore every month my payment was $5K.

 

- I was accepted for the chase sapphire reserve and paid my first 5K payment using it without problem through the automated system. Paid off the credit card immediately from my savings account.  Done and Done. 100,000 points for being a good boy and paying off my student loans with no fees.

I have the remainder of the balance of $35K in the savings account and I could continue to make monthly $5K payments via credit card and continue earning points. The peace of mind comes from the fact that at any time I could simply direct debit the entire balance of my loan and be done with it. (sans points).  I have a feeling I may do one more introductory big points offer on a new credit card and then pay off the balance with cash just to be done with it.

- You have to be vigilant about making payments monthly and paying off the credit card  to avoid fees and interest.  but if you're on this forum you can definitely do it.

 

I used the info below from a different forum to make my monthly payments. If you use their automated system and pay the amount due there is no fee for using a credit card.

I paid my loans (normal payment) by credit card last night for the first time.

I did speak with a live person last week, but she said it would cost me $14.95 to process. Here's what I did last night:

1. Called 888-272-5543
2. Went through prompts for "Make a payment"
3. Got automated message saying to call back during business hours

4. Called same 888-272-5543
5. Went through prompts, but this time made it to the next step - the system walked through my loan groups and asked if I wanted to make a payment.
6. I followed the prompts and made the scheduled payment on each loan group, with no fee charged.

 

I'm using my 100,000 points for a trip to Hawaii with my wife, hope you all can do the same!

[conniebird]

Thanks for posting...WCI had a article about this but it pretty much said there is $15 fee each time...so I never looked into it.

 

You just made this payment...so I'd like to see if you get charged for making this payment...let us know either way!

 

p.s. I got 100K points with my regular chase sapphire and bought tickets to Hawaii too!

[Dr_Wigglytooth]

You can also use CC with Great Lakes as your servicer but it works a little differently. You can only make "one time extra payments" by telephone. So what you want to do is keep your minimum monthly payment low and on autopay (to get a 0.25% break) while making a call monthly to pay extra when you can. This could be a good strategy to lower debt to income ratio for someone just starting, on IDR who will not get PSLF, and some extra cash each month after saving for other goals. I recommend for simplicity pulling out the loan you would like to target if you have multiple loans in one group. I paid 25k off this way over the last 7 months and plan on continuing until either I can refi for a better rate or my interest subsidy runs out.

[pierre]

I will definitely keep this in mind when I'm out of residency. It seems like a better strategy if you are starting at the beginning and don't have a stockpile of cash to pay your loans off today, but have good cashflow and can afford very large payments.

 

Correct my math if I'm wrong...

100,000 credit card points = $1,000 cash (maybe if directly buying travel you get a little better conversion)

$40,000 at 3.5% interest = $1,400 per year = $117/month x 8 months = $936 dollars

so at this point, the net benefit of keeping your loan for 8 months vs paying off today is $64?

 

[doc01]

Update: No fees after doing this 5k credit card payment for 2 months so far. Will using automated system with Navient. Pierre great point about accrued interest with paying off over 8 months negating the cc bonus. It would be more than 64$ as each 5K payment over the 8 months also earns points and if you can sneak in another big sign up bonus for a new credit card it would definitely be worth it.

I have decided to get one more sign up bonus then finish paying off the loan with cash. It's irks me to keep accruing that interest.

I hope this helps some folks. Good luck.

[DMFA]

pierre wrote:

I will definitely keep this in mind when I’m out of residency. It seems like a better strategy if you are starting at the beginning and don’t have a stockpile of cash to pay your loans off today, but have good cashflow and can afford very large payments.

 

Correct my math if I’m wrong…

100,000 credit card points = $1,000 cash (maybe if directly buying travel you get a little better conversion)

$40,000 at 3.5% interest = $1,400 per year = $117/month x 8 months = $936 dollars

so at this point, the net benefit of keeping your loan for 8 months vs paying off today is $64?

 

Click to expand...

Good reasoning, but you're missing a few factors.  The 100k points should be worth at least $1500 since they're redeemable at 1.5x through Chase, and possibly more if transferred to several partners.  Also, the points earned on those payments of $40,000 are further worth at least $600 ($0.015 per $1 spent).  So, you've got:

+ $2100 extra from using the card
- $936 student loan interest
- $450 in an annual fee (per 12 mo)
+ $600 in 2 $300 travel credits (per calendar year)
= $1,314 in benefits (if you cancel the card before the second annual fee is due)

[DMFA]

doc01 wrote:

Update: No fees after doing this 5k credit card payment for 2 months so far. Will using automated system with Navient. Pierre great point about accrued interest with paying off over 8 months negating the cc bonus. It would be more than 64$ as each 5K payment over the 8 months also earns points and if you can sneak in another big sign up bonus for a new credit card it would definitely be worth it.

I have decided to get one more sign up bonus then finish paying off the loan with cash. It’s irks me to keep accruing that interest.

I hope this helps some folks. Good luck.

Click to expand...

Just watch the small hit to your credit score with the multiple inquiries, and make sure you cancel any annual fee cards before the second annual fee is due.  Also make sure you maximize any calendar year vs 12 month term benefits, such as CUR's travel credit, to get 2-for-1.

[Craigy]

Many student loans offer a quarter point discount if you are making auto debit payments from their bank account.  Does paying with a credit card mess this up?  Seems like it would.

[doc01]

Craigy, yes this would negate the quarter point discount as this is not an auto debit. You physically have to pay over the phone with your credit card each month.  If you have a 30 year repayment plan for your loan it is NOT worth paying with credit card.  Firstly, as you pointed out you lose the quarter percent discount which is very valuable over 30 years. Secondly, the small monthly payment over 30 years would not accrue enough credit card points to make it worthwhile.

 

In order to benefit you have to increase your monthly payment and decrease the life of the loan ( for me that was going from $545/month 30 year repayment to a $5200/month 8 month repayment)  Again, make sure you have the full repayment amount available in a savings account so there is no chance you can't make the large credit card payment due to unforseen circumstances.

 

 

 

 

[tex]

Due to wife receiving NIH LRP award, payments on her Navient loan payment schedule have now been made far in advance (next required payment is years from now). She didn't get award this year, but will re-submit next year. While it doesn't make sense to a) make early payments that very well may be paid by NIH in the future or b) refinance and make ineligible, I have a side account where I will stash extra savings for a possible future payoff. If she doesn't get LRP next time around, I will hopefully be able to still use this method to make some lemonade out of having to repay the loan. Thanks!

[doc01]

As usual the student loan companies continue to find ways to screw the consumer. Hopefully, some of you were able to benefit.  From the Navient website homepage:

 

Effective 1/1/17, federal student loan servicers such as Navient will no longer be able to accept credit card payments. We will continue to accept payments using your debit card over the phone.

[ginmqi]

Dang it. As someone who also dabbles a bit in the credit card churning game (I too have a CSR, a CSP, also few other cards for the signup bonus) I was actually thinking to see if we can pay off our student loans with credit cards so I can get those sweet Chase UR points.

Seems like Nelnet does not allow this in the first place.

One more thing: if I refinance my fed loans (which is through Nelnet) to one of the WCI recommended private lenders....then I assume that lender will become the "servicer" and that maybe one of those lenders can have a way to pay our student loans through credit cards?

 

[ginmqi]

A quick update after sometime researching this topic.

As of 1/1/2017, the US Treasury has directed all federal loan servicers to cease accepting loan payments via credit cards

source: http://www.doctorofcredit.com/federal-student-loans-cant-paid-credit-card-beginning-2017/

From Reddit, some members were able to go around this via two ways:

1. People were claiming they lived overseas and apparently if you bring this up to the servicer on the phone (Nelnet) they can do CC payments. One redditor actually claimed a random coffeehouse in New Zealand. Of course with the new US Treasury directive, this may stop working.

2. People were claiming that the CC # is a debit card and simply asked to pay by Visa debit. Apparently the payment processing system on the loan company's end are not able to tell between CC and debit.

3. One person simply said he would like to pay by CC and it goes through without issue (others have had problems).

reddit thread link here: https://www.reddit.com/r/churning/comments/5ltt91/2017_federal_student_loan_servicer_update/

Other ways to do this:

4. Buy a gift card debit card (Visa/MC) from brick and mortar store using your CC and then using that gift debit card to pay off the loan. This does come at a fee.

5. Buy a Gift of College gift card specifically designated for loan/529 payments. Also fee applicable but less so.

6. Use a Plastiq account, which apparently is an account you can load money into with a CC, then they can send out a check +2.5% fee to whomever you want. This can also be used it seems to pay rent, utilities, and other types of loans it seems.

7. You can use a CC to convert/buy certain "cash-equivalent" assets and then use that to payoff things. This is similar to Plastiq but other things (which are now dead) are the Bluebird/Amex account and Amazon payments and such accounts that you can fund with CC. The most interesting of this category is a group of people who have found out a way to buy money orders via credit cards (probably using a convoluted way since no place as far as I'm aware allow you to buy a MO directly with a CC). And the money order is a cash-like asset that can be used for other means. Of course many do what's called a "manufactured spend" where they deposit that MO back into their account and pay off the CC balance....hence spending money in a circular manner to collect those sweet points. but this can be very tenuous legally as it can amount to what's called structuring in the banking regulation world and can bring the feds in to investigate: http://milestomemories.boardingarea.com/money-orders-manufactured-spend/

Good site for student loan options: http://www.doctorofcredit.com/new-option-for-paying-rent-tuition-more-via-credit-card/

[EJ at Dads Dollars and Debts]

Dude...awesome post. Really nice work! This is great.

 

-EJ

[DMFA]

1. Sounds like fraud to me
2. Why not?
3. Ditto
4. Depends on the fee. This sounds similar to the common points scamming tactic where you buy a bunch of gift cards with a points CC, buy merchandise with $1 of real money and the rest on a the gift cards, then return the merch for cash and pay your CC bill. However if the gift cards' fees are more than what you'd get back for the card (CSR gives 1.5%, not counting the 100k opening bonus), it's not worth it
5. Seems like a good idea
6. 2.5% fee is more than you would earn back from the card (1.5% reg purchases, 4.5% travel/dining). Not worth it unless you're solely using it to hit the bonus threshold (and imo there are better ways to do that).
7. Seems iffy, just like you mentioned