Should I take out a student loan to pay off debt?

Question

I am going to start grad school this next semester - Spring 2010.  I have some debt (credit card, motorcycle loan, etc.).  I do not need any financial aid to pay for school or housing, but I was thinking about taking out a student loan (federal unsubsidized Stafford loan) to pay off some of my debt since the interest rate on those loans are fixed and are lower than the interest rates on my credit cards.  Does anyone see a problem with doing this?

thelau · Accepted Answer

If you can manage the debt without going into bankruptcy, go nuts. Sounds like a good idea.

juliazumba · Answer

If you are in the amazing financial position to both qualify for a loan and not need it, you should use it too pay high interest loans you have outstanding.

However, keep in mind that most schools will first see if you need the money (since it is not a private loan). So unless things have changed since I went to school, they might not give you the loan.

Boots · Answer

One major problem. 

Student Loan debt can not be discharged in bankruptcy. The only way to get rid of it is to pay it off.

Motorcycle loan, credit cards can be discharged in bankruptcy. That means, if you ever got in a tight spot and had to declare bankruptcy, those loans would not be discharged.

Your best bet is to leave the loans as they are and just work your fanny off to pay them off.

Stephanie · Answer

Bad credit student loan that is sponsored by the government is dispersed by the colleges and schools. The amount that could be acquired as government student loan varies dependent upon the requirement of the borrower. It is dependent upon the administration of the school and colleges, 

http://www.worldbestloans.com/

Understanding the present scenario, several online loan providers have come up with loan services especially catering to the needs of students with a bad credit history. It is advisable to browse through the interest to locate an appropriate student loan services provider. Before procuring student loan from an online services provider, it is suggested to navigate through the internet.

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Anonymous · Answer

Yes.  You will be trading debt that can be discharged in bankruptcy with debt that cannot be discharged in bankruptcy.

That's foolish.

Should I take out a student loan to pay off debt?

7 Answers