Seeking Ways to Pay for College? These Credit Cards Promise Savings
Some credit cards are expressly designed to encourage saving for college or paying off student loans. They can help on both fronts, but think of them primarily as supplemental tools.
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“College is affordable,” said no one, ever. In the 2022-2023 school year, the average cost of tuition, fees, and room and board for one year at a public four-year institution was $22,389, according to the National Center for Education Statistics. For a private four-year institution, the average was a stomach-churning $49,654.
These numbers may have many of us asking ourselves how to pay for college. The answer often includes a combination of scholarships, grants, loans and income from a job or work-study. But there’s one way to pay for college that you may not have considered: credit card rewards.
In a nod to the ever-increasing cost of higher education, issuers have introduced several credit cards that help consumers defray the cost of college. Some of these cards funnel cash back into a 529 plan; others let you use rewards to pay off student loans.
We’ve rounded up some credit cards that can subsidize some college costs, but with one important caveat: Credit card rewards most likely won't be enough on their own. Rewards are a tool for padding a college savings account or supplementing a student loan payment, not a sustainable solution for funding several years’ worth of school.
If you don't want to be bound by the restrictions of these cards that make college savings more seamless, you could manually deposit the rewards from any standard cash-back card into a college savings account.
Credit cards that help save for college
Best for those with a Upromise account: Upromise Mastercard
Barclays’ Upromise Mastercard incentivizes you to save for college by offering a higher rewards rate — a symbolic 1.529% — if you link your Upromise account to an eligible college savings plan. The cash-back rate drops to 1.25% if you haven’t done so. Fortunately, the list of qualifying college savings plans is pretty extensive.
Once you accrue at least $50 in rewards, they will automatically be redeemed for cash back into your linked 529 plan during the first week of the month.
Gift cards ordered from MyGiftCardsPlus.com and purchased with the Upromise Mastercard can net you an additional $250 cash back annually. You’ll get a $10 bonus on total gift card purchases between $50 and $149.99 and a $20 bonus on purchases of $150 or more. You can only earn one cash-back bonus per month, but the bonus increases to $25 in November and December for a spend of $150 or more.
Best for a flat cash-back rate: CollegeCounts 529 Rewards Visa Card
Like the Upromise Mastercard, the CollegeCounts 529 Rewards card offers a 1.529% rate on all purchases. Cash back is automatically deposited into your CollegeCounts 529 account once you’ve earned at least $50. Even though CollegeCounts 529 is Alabama’s state-sponsored plan, credit card applicants do not have to be Alabama residents to get the card and enroll in a CollegeCounts 529 plan.
Best for those with a Fidelity 529 plan: Fidelity® Rewards Visa Signature® Card
All purchases made with the no-annual-fee Fidelity® Rewards Visa Signature® Card earn an excellent unlimited 2% back — but only if you redeem rewards into qualifying Fidelity accounts, including a Fidelity-managed 529 college savings plan account. (Other redemptions won't get you as much value.) Rewards may be redeemed at any time, but you must have at least 2,500 points for a deposit into a 529 account.
Best for those with a Merrill 529 plan: Bank of America® credit cards
The following Bank of America®-issued consumer credit cards allow cardholders to redeem rewards for credits to a qualifying 529 account, but it must be with Merrill, a Bank of America® company:
Bank of America® Customized Cash Rewards Secured credit card
Bank of America® Unlimited Cash Rewards Secured credit card
All of these Bank of America® credit cards have a $25 minimum for one-time redemptions to a 529 account.
Accelerate the rewards earning process by adding your spouse or partner as an authorized user to your credit card account. That way, you’ll get cash back on what you both spend. Just be sure you can trust that person to spend responsibly as authorized users are not legally responsible for paying the credit card balance.
Credit cards that help repay student loans
Best for those with a SoFi Loan: SoFi Unlimited 2% Credit Card
Points earned with the SoFi Unlimited 2% Credit Card can be redeemed, among other things, for cash that can be applied to the balance on a SoFi student loan refinance. Rewards may be redeemed at any time and for any amount. True to its name, the SoFi Unlimited 2% Credit Card earns an unlimited 2% back on most purchases
Best for a big sign-up bonus: Laurel Road Student Loan Cashback Credit Card
The rewards structure of the Laurel Road Student Loan Cashback Credit Card mimics many of its peers: You’ll get 2% when you redeem rewards to pay a student loan and 1% for everything else. Public and private loans are eligible; check here for the list of student loan servicers that partner with the Laurel Road Cashback card.
Where it stands out from the rest: its generous sign-up bonus. As of January 2023, cardholders can earn $300 to put toward a student loan after spending $3,000 within the first 90 days of account opening. (The amount drops to $150 if rewards are redeemed for a statement credit.)
Flexible rewards redemption is another perk of the Laurel Road Student Loan Cashback Credit Card. Cash back can be redeemed at any time for as little as 1 cent.
Best for those with Bilt Points: Bilt World Elite Mastercard® Credit Card
Redemption options for points earned with the Bilt World Elite Mastercard® Credit Card include payments toward student loans. One Bilt Point is worth 1 cent when redeemed this way, a solid value. The minimum redemption amount is 1,000 Bilt Points, or $10. As of this writing, Bilt Rewards may only be applied to student loans serviced by Nelnet, MOHELA, Sallie Mae, Aidvantage and Navient. However, Bilt says it plans to add more servicers in the future.
Bilt Rewards converted to loan payments are applied to fees, interest and finally the principal.
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