Consolidating debt onto student loan

[Tazman81]

I would not recommend consolidating debt into a student loan because if you run into trouble down the road, there is no way to get rid of that debt.  Why take out more student loan debt then you actually need.  Also, I doubt that full $8500 is subsidized by the government.  Normally 1/3 - 1/2 may be subsidized, but the other amount is unsubsidized.  I would just be very careful with that because if you were to ever default on the loan (not that you intend to, but of course I didn't intend to filing bankruptcy either), they WILL guarnish your wages, and take your tax returns until it is paid back.  I mean, its the government we are talking about here.  I think more and more people are seeing this happen ever since the government started taking over the majority of the federal loans.  Anyhow, that's just my 2 cents.  I think its a bad idea to do.

[laz98]

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@Tazman81 wrote:

I would not recommend consolidating debt into a student loan because if you run into trouble down the road, there is no way to get rid of that debt.  Why take out more student loan debt then you actually need.  Also, I doubt that full $8500 is subsidized by the government.  Normally 1/3 - 1/2 may be subsidized, but the other amount is unsubsidized.  I would just be very careful with that because if you were to ever default on the loan (not that you intend to, but of course I didn't intend to filing bankruptcy either), they WILL guarnish your wages, and take your tax returns until it is paid back.  I mean, its the government we are talking about here.  I think more and more people are seeing this happen ever since the government started taking over the majority of the federal loans.  Anyhow, that's just my 2 cents.  I think its a bad idea to do.

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that's a really good point.  what year in school are you?  it hadn't occurred to me that 8500 was a really high amount for a subsidized loan.  are you sure that's not the combined total of a subsidized & unsubsidized loan?  not saying you're wrong, just trying to work out the math.

[Anonymous]

Hey everyone, sorry just had a chance to get back on the forums. Let me clarify.

1. Yes, the student loan excess would be to pay off items OTHER than school expenses. Yes, I understand that is not the intended purpose. I am not asking this from a moral perspective.

2. Yes, I was offered $8,500 in a subsidized federal loan and $1,500 in unsubsidzed (which I would never accept). This is because I started my grad school in the Spring Term, so I am eligible for the full years cap on loans, but only need for 1 term.

3. I agree that student loans not being discharged in a bankruptcy could be a concern for many people. Although I have considered that, both my wife and I have very stable jobs and are confident in repayment ability.

That being said, I am glad to hear that someone else has done this, as I have a lot of friends that have as well. Although nobody likes to shift debt around - the ability to cut an interest rate in half, switch from revolving to installment, and have no payments/interest until 6 months after graduation is a really good deal. If for some reason we ever did lose our job, or another unforseen circumstance, we could change our repayment plan over to income sensitive to protect ourselves, or at worst case ask for a forbearance. Both are legitimate options in a bad situation. Anyways, thanks for everyone's opinions. That's why I posted - to here the other side of the story.

[Tazman81]

So, this was poking at me all night, so I am just going to say my peace and move on.  Stuff like this burns my chops.  I am not trying to fault just the OP, but just anyone in general that would handle a subsidized student loan in this way.  I wish there were more regulation regarding this making sure that these types of loans can only be used for school expenses.  Why should I (the taxpayer) have to pay for interest on a loan that isn't even going toward an individual's education?  Anyhow, I've said my peace, and I'm going to leave it at that.

[MarineVietVet]

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@Anonymous wrote:

Hey everyone, sorry just had a chance to get back on the forums. Let me clarify.

1. Yes, the student loan excess would be to pay off items OTHER than school expenses. Yes, I understand that is not the intended purpose. I am not asking this from a moral perspective.

2. Yes, I was offered $8,500 in a subsidized federal loan and $1,500 in unsubsidzed (which I would never accept). This is because I started my grad school in the Spring Term, so I am eligible for the full years cap on loans, but only need for 1 term.

3. I agree that student loans not being discharged in a bankruptcy could be a concern for many people. Although I have considered that, both my wife and I have very stable jobs and are confident in repayment ability.

That being said, I am glad to hear that someone else has done this, as I have a lot of friends that have as well. Although nobody likes to shift debt around - the ability to cut an interest rate in half, switch from revolving to installment, and have no payments/interest until 6 months after graduation is a really good deal. If for some reason we ever did lose our job, or another unforseen circumstance, we could change our repayment plan over to income sensitive to protect ourselves, or at worst case ask for a forbearance. Both are legitimate options in a bad situation. Anyways, thanks for everyone's opinions. That's why I posted - to here the other side of the story.

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A million people can all do the wrong thing and it still doesn't make it right.

And that's all I'm going to say in this thread.

[Anonymous]

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cdtotten wrote:   I am not asking this from a moral perspective.

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Just because you can do something, doesn't mean you should.  (You can become a fan of this on facebook!)

closely related to:  Just because you lost yours, doesn't mean you can borrow mine.

What I'm most fascinated by is being able to take off your "moral hat" when asking this question.  What hat is it that you are then putting on?

[laz98]

if you already knew that people had done it, & that you were probably going to do it anyway, why would you even need to ask the forum?

[Tazman81]

All I have to say is REALLY????

http://ficoforums.myfico.com/t5/Auto-Loans/Should-we-buy-a-new-car/td-p/822020

[Anonymous]

Tazman, I dont quite understand why you are attacking the OP. He asked a legitimate question and was looking for help. I know I come on this site a lot (dont post a lot) because people ask questions that I already had (and this is one of them actually). Your argument against him seems to be that student loans aren't to be used for other reasons... I agree, but student loans are meant to pay for the cost of room/board/living expenses while at school... and if this poster wants to pay off some CC debt so he has money to afford those extra costs, then so be it. You link to his post about his wife getting a new car, which I just read, and act like he did something wrong.

It appears they added a family member and were curious based on their current payment and positive money situation whether they should upgrade now or later... the two posts aren't even related.

Anyways, I just don't think we need to be attacking someone on this board because you don't agree with their question. I see people everyday on this board "using credit" instead of being a slave to it... it appears that's what he is trying to do.

[Anonymous]

I don't think tazman is attacking anyone - he is also asking a legitimate question.

If I were OP, I would welcome this discourse.  As he stated in his original post, "I thought I would ask everyone's opinions"

He also states that "My wife and I have combined CC debt of approximately $6k total."  That makes it appear that this debt is not all his, but is also his wife's.  In that case, it's probable that garnering opinions will be helpful to him as he and his wife discuss using his student loan to help pay off her debt as well as his - rather than using it for educational purposes.  Adding the purchase of a new vehicle into the mix is not unrelated - but an appropriate point to consider in reference to OP's original question.