cancel
Showing results for 
Search instead for 
Did you mean: 

Should I use my next plus loan disbursement of $14000 to pay part of my undergrad student loan

tag
Lexi0000
Valued Member

Should I use my next plus loan disbursement of $14000 to pay part of my undergrad student loan

I don't know if this is a good idea. The current rate for plus loans is 7.21 which is higher than the ones on my undergrad loans and since I'm still in grad school, I won't need to start repaying until March 2016; I'm pretty sure I would have found a job in my field by then. The interest is being paid on both loans.

My undergrad loans however will be due for repayment right after I'm done with Grad school sept 30th.
I won't need the next plus loan disbursement so I was thinking of using it to pay $14000 of my $21000 undergrad loan. Will it be a good move or should I just cancel the next disbursement? I'd still owe the same amount anyway since I'm using a loan to pay another one but the only difference is one is due sooner and I'm not sure they'll let me defer it again, as I've done it quite a few times already.

Thanks.
Message 1 of 5
4 REPLIES 4
Anonymous
Not applicable

Re: Should I use my next plus loan disbursement of $14000 to pay part of my undergrad student loan

I would recommend you cancel the disbursement if you don't absolutely need the $ to finish your program. It's best to use loans as a last resort, to cover expenses you can't fund from any other sources. Also, never borrow at a higher rate to pay off a loan at a lower rate.
Message 2 of 5
SCF
Valued Contributor

Re: Should I use my next plus loan disbursement of $14000 to pay part of my undergrad student loan

Are these federal or private loans from your undergrad?  Federal loans can be placed on an income driven payment plan that will keep your payment affordable even if it takes you a few months to find steady employment.  Even if they are private, you may still have some options for delaying or reducing your payments, you will just have to contact the lender and explain the situation.

 

You should never trade debt like this for a higher interest rate.  A much better (but far from ideal) solution would be to refuse most of your loans, but accept $1000 or whatever 2-3 months of payments on the undergrad loan would be.  That way, you can have that money on hand to cover the payments after you graduate.  A far better plan is to return all of the money (since you don't need it for your education expenses), and use the time you have to make a plan to be able to pay your loans when you graduate.  Can you pick up a part-time job, or some side gigs to save enough money?  You should be planning to have a financial cushion for the transition anyway, and this is an important part of that.

Message 3 of 5
Lexi0000
Valued Member

Re: Should I use my next plus loan disbursement of $14000 to pay part of my undergrad student loan

Ok, thanks to both of you.
Message 4 of 5
Luscher
Valued Contributor

Re: Should I use my next plus loan disbursement of $14000 to pay part of my undergrad student loan

Cancel the new loan.
CHASE FREEDOM | AMEX BCE | | BOFA REWARDS | CITI TYP | Quicksilver | DISCOVER IT | Sallie Mae | CHASE CSP
--------$32,000-------------$30,000-----------$30,000-----------$30,000-----$13,000---------$18,200----------$15,000---------$6,500----

FICO - TU: 780 EX: 784 EQ: 781
Message 5 of 5
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.