Student Loans

[learningthegame]

I'm a grad student trying to boost my credit score. I have a bit of credit card debt left over from some leaner times, I've been paying off far more than the minimum and always on time but am wondering if it would be unwise to use student loan money to just pay off the whole card (after paying tuition, of course). I know moving debt around isn't generally a good idea but is it better to owe a couple thousand more on a student loan and have no credit card debt? Thoughts?

[Timothy]

While this would/could increase your credit score- 

It would drag the length of payments out to YEARS- and could very well cost more $-

I would get a plan together to get the revolving debt paid off in X time-

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learningthegame wrote:
I'm a grad student trying to boost my credit score. I have a bit of credit card debt left over from some leaner times, I've been paying off far more than the minimum and always on time but am wondering if it would be unwise to use student loan money to just pay off the whole card (after paying tuition, of course). I know moving debt around isn't generally a good idea but is it better to owe a couple thousand more on a student loan and have no credit card debt? Thoughts?

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[masdeocho]

Welcome learningthegame!

Check the terms of the loan agreement -- you may be prohibited from using your student loan $ to pay off previous debt.

[vanessa]

Hello guys, "Good" vs. bad debt" it is how we recognize the debt. Is there a bad and good debt? Of course yes! Debt is good because we can't live without a debt. Why people choose debt rather than cash? Basically, we think that we can save money for a day to pay for something we get credit,instead of paying it for cash.The good in credit is we can pay for the items in a later time or installment basis. The bad effects for debt are people try to forget that the account was already due but he/she did not pay it. Nowadays, many elusive borrower which they are really hard to pay for their account. Another thing we need to consider if we are the creditor we should find ways that a debt would always good so that our credit company will boom. For the borrower as well, we need to cooperate to our creditor, we pay on time and remember that we have an account to be settled. Being a good payee to our creditor can increase credit capacity to pay and can decrease bad debt for them. ________ vanessa Don't be a victim. Stop credit card debt now. We can help. [REMOVED]

Message Edited by Timothy on 06-01-2008 08:59 PM

[DrNerd]

Interest from student loans is tax deductible.  Even before itemizing.  This combined with a lower interest rate on student loans make them the best debt you can have.  Always use extra money from a student loan to pay of other debt.

We recently used about 6k of my wife's student loan to pay off her credit cards.  The interest went from 16% to 6 and that 6% can be deducted from out taxes.

[gabbismommy01]

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DrNerd wrote:

Interest from student loans is tax deductible.  Even before itemizing.  This combined with a lower interest rate on student loans make them the best debt you can have.  Always use extra money from a student loan to pay of other debt.

We recently used about 6k of my wife's student loan to pay off her credit cards.  The interest went from 16% to 6 and that 6% can be deducted from out taxes.

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Just be careful doing this. There is a max income bracket to deduct student loan interest. I made 75K last year and was not able to deduct ANY of my interest paid because I make to much. I think I recall the bracket being around 55K or so but don't quote me on that.

[Nectarine]

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learningthegame wrote:
I'm a grad student trying to boost my credit score. I have a bit of credit card debt left over from some leaner times, I've been paying off far more than the minimum and always on time but am wondering if it would be unwise to use student loan money to just pay off the whole card (after paying tuition, of course). I know moving debt around isn't generally a good idea but is it better to owe a couple thousand more on a student loan and have no credit card debt? Thoughts?

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I think it's worth it, if you pay it off as fast as you possibly can. Student loan companies try to sell you on the "only $50 a month" idea, because it makes them tons of money in interest. If you can spare $200 a month, it will be paid off in about a year -- but $50 a month can stretch it out for quite a while. For a lot of people, they can also deduct the interest paid (up to $2500/year).

IMO, it's generally better to have student loan debt @ 6% than CC debt @ 16%.

[bnorm]

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learningthegame wrote:
I'm a grad student trying to boost my credit score. I have a bit of credit card debt left over from some leaner times, I've been paying off far more than the minimum and always on time but am wondering if it would be unwise to use student loan money to just pay off the whole card....

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it would be unwise for you not to do it. student loan debt is almost always the lowest interest rate out there, particularly if you consolidate after graduation and lock in a low, low rate for life. in addition, you can write off the interest from your taxes, a benefit you do not get from the CC companies.

[TheNewWorldMan]

Provided you are legally able to do it, yes, sloshing the student loan money into the credit cards will help improve your credit score. Balances on revolving accounts count against you far more than loan balances.

My caveat would be to make sure you don't end up charging the credit cards back up again.

[freedogshampoo]

Yup. Sounds like a great idea. The only downside is that if you ever have to declare bankruptcy, you won't be able to get rid of the original cc debt, since it will be part of your student loan.