Thoughts on "Private Student Loans" BT to Credit Cards?

[Creditaddict]

I'm watching Suze Orman and a couple times student loans and especially Private student loans as much as she hates them... Im just curious on thoughts of say a 100k Private Loan moving over $50-$75k to credit cards if possible with good rates based on a private studen loan that keeps moving?

Would you still do it or not do it if you could only move $30k or if you coul move entire amount??

Hope this stays in Credit Thred since end result is credit cards!

[LS2982]

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@Creditaddict wrote:

I'm watching Suze Orman and a couple times student loans and especially Private student loans as much as she hates them... Im just curious on thoughts of say a 100k Private Loan moving over $50-$75k to credit cards if possible with good rates based on a private studen loan that keeps moving?

Would you still do it or not do it if you could only move $30k or if you coul move entire amount??

Hope this stays in Credit Thred since end result is credit cards!

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Thats a lot of money to move to CC's, it would have to be a very nice rate for for a good while.

[CreditScholar]

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@Creditaddict wrote:

I'm watching Suze Orman and a couple times student loans and especially Private student loans as much as she hates them... Im just curious on thoughts of say a 100k Private Loan moving over $50-$75k to credit cards if possible with good rates based on a private studen loan that keeps moving?

Would you still do it or not do it if you could only move $30k or if you coul move entire amount??

Hope this stays in Credit Thred since end result is credit cards!

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Private student loans are quite problematic and I hear about them at work all of the time. The main issue with private loans is that there are very few options when you can't pay them off. They are not dischargeable through bankruptcy, and there is an entire generation whose financial lives are essentially ruined. Many of these students don't even know it yet. Most of them won't be able to secure employment that pays enough to make a serious dent in the principle owed, because the near minimum wage jobs that a lot of recent graduates are relegated to barely keep up with the interest that is accruing. I don't see their prospects getting better anytime soon, so they're basically screwed for life. Part of it is the economy, and part of it is that some people were stupid enough to take out huge loans for degrees that offer little chance of a decent return. Nonetheless, if someone had a chance to transfer their private loans to a credit card, it might be their only way out. Moving it over to credit cards (which are unsecured debt), paying it for a couple of years to make it look like they tried, and then declaring bankruptcy may be their best option. While costing you about 10 years of credit history and arguably being unethical, for someone with 100k in student loans it's the best option of a bad bunch. Most students graduating with 100k or more in private student loans, especially if they have worthless degrees, may never pay it off otherwise. 10 years looks the bargain of the century when compared to the alternatives.

[lithium78]

Moving your private student loans to credit cards is probably only a good idea if you are planning to file for bankruptcy.  Otherwise, the interest is probably going to be a lot more than you would already be paying.

[Voodard]

+1 to lithium78's comments. Only if you're going to file for BK would I move the debt to credit cards.

[Revelate]

I haven't ever gone through the process but wouldn't the lenders and judge be sophisticated enough to realize exactly what happened in this case?

Odds are if they can't make a dent in the student loans, I don't think they'd have 30k available credit in the first place these days?

[jsucool76]

+1 to the BK comment. 

Just seems like it would be a bad idea. A loan is a loan, but with a credit card if you miss a payment or something, you'll get the penalty APR (Which is probably more than your student loans APR) or the card company could start balance chasing you and skyrocket your utilization. Too many unknowns when it comes to CCs, at least with a regular loan you know the terms, a CC can always change theirs. 

[jamesdwi]

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@Revelate wrote:
I haven't ever gone through the process but wouldn't the lenders and judge be sophisticated enough to realize exactly what happened in this case?

Odds are if they can't make a dent in the student loans, I don't think they'd have 30k available credit in the first place these days?

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+1000

the lenders would see what happened, and would file a motion to have the whole case kicked to the curb. They go back and look at what your spending for the last 6 months before  you file probably longer. If you played favorites with any creditor you have broke the law.  

The student loans may be the worst TL ever at least they are regulated and have a low interest rate, Just pay them off over time, moving them to a credit card opens the door to major problems, miss a payment, max out the card and you are looking penalty APR kicking in, What is your minimum payment on your $100,000 in debt. Its surely more than your student loan payments.  

[SwampSystems]

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@Creditaddict wrote:

I'm watching Suze Orman and a couple times student loans and especially Private student loans as much as she hates them... Im just curious on thoughts of say a 100k Private Loan moving over $50-$75k to credit cards if possible with good rates based on a private studen loan that keeps moving?

Would you still do it or not do it if you could only move $30k or if you coul move entire amount??

Hope this stays in Credit Thred since end result is credit cards!

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Keep in mind that most installment loans are simple interest whie credit cards are compound interest. Even if you move the loans to a credit card with a "lower" rate, you may end up paying the same amount or more in interest on the credit card since you'll then be paying interest on the interest. It is also dangerous for bankruptcy as others have mentioned.

But if you're getting screwed badly with the student loan APR, and you can find a good credit card to transfer the balance to (one with a good, low NORMAL APR, not just a low promotional APR), you might benefit from moving some of the balance. Just keep in mind any fees involved, and that once you do it you have to make sure to not miss any payments at all. Pyramid debt is very dangerous if you're not extremely careful with it.

Do not hesitate to seek refinancing/consolidation loans either. With how low current interest rates are, you might be able to get a much better deal on a new, private loan. Carrying a high revolving balance is going to kill your credit; carrying an installment loan isn't nearly as bad.

[navigatethis12]

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@lithium78 wrote:

Moving your private student loans to credit cards is probably only a good idea if you are planning to file for bankruptcy.  Otherwise, the interest is probably going to be a lot more than you would already be paying.

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Buying this without the intent to pay is fraud. Any judge that sees that was what was done would throw the case out, and if they did not the creditors would definitely appeal the decission. The only reason to transfer the loans would be if the cards had zero interest and you could pay it off in time. Anyone with that much student debt must not have actually taken in the knowledge they were learning, because you must be very dense to spend that much on education.