Paying off credit card debt with med school loans?

[milski]

This doesn't disagree with anything said here. It is still not allowed per typical loan terms, but the likelihood that you will ever be caught is essentially zero unless you're a complete ***** or have terrible luck.

Sent from my SGH-M919

Something else, that IIDestriero keeps repeating, and that should be kept in mind is that whoever gave you the loan has no interest in enforcing that clause of it. Typically, the loan will be due immediately after you're caught breaking the terms. If you already are dealing with consumer debt, the chances of paying your student loans on the spot are zero. Making you default is not going to change that. I cannot imagine in what situation this will be enforced. I would still keep it to myself and avoid sharing the details with anyone.

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[pre med 2014]

Funny I am in almost the same position. I plan on using student loans to pay down some credit card debt from applications, seat deposits, and maybe some other expenses related too ....*****cough cough cough *****

 

[pre med 2014]

Probably not the best idea to use debt to pay debt.

It is a good idea if you pay higher interest debt with lower interest debt. Your debt is still the exact same amount except accruing a smaller interest.

 

[darkjedi]

Probably not the best idea to use debt to pay debt.

it is the only smart decision if you are paying your debt with a lower interest debt, same reason why people refinance mortgages.

 

[mvenus929]

A lot of the schools I've checked have nearly 2k in "personal expenses" added to the estimated tuition. On top of that, a lot of the schools will say something like "room and board estimated to be 1200/month for the 9 months of the first year" then budget 17,000 into their COA instead.

One of the things to keep in mind is that for first year, they often only provide a budget for 9 months. Depending on how your school does its academic calendar, the same may be true of second year, while third year usually universally covers 12 months.

Depending on where you live and your living expenses, it may be difficult to find an extra 10K to pay off old credit card debt. Sure, over 4 years, I'm sure you could manage, but I don't know how many people can take out 10K less than the cost of attendance first year and still have a decent living situation.

 

[pDeluxe]

Bumping this thread for anyone else who was wondering about paying cc debt with student loans.

If I'm understanding this correctly, in my case, I have about $2.5k in cc debt at 11.99% APR that I want to pay off in full with med loans, which will either be at 7.21% (Direct PLUS) or 6.21% (Unsubsidized Direct) for the 2014-15 school year. The advantages are that 1) I will be moving borrowed money from higher interest to a lower interest, and 2) I will be avoiding monthly payments of cc debt (which are not deferrable). Disadvantages are that I'll have to budget more carefully to ensure that I can cover cost-of-living expenses for the school year, since if I borrow $X to cover all non-tuition costs, I'll have to manage with $ (X-payoff amount), although that should be more than enough. Anything I'm overlooking?

Also, anyone have thoughts on opening a personal line of credit as an "emergency fund" during med school? Considering it, since the interest rate is lower than just holding onto a credit card, but I presume it is easier to access than trying to go through the financial aid office at school and get a COA adjustment...

 

[darkjedi]

Also, anyone have thoughts on opening a personal line of credit as an "emergency fund" during med school? Considering it, since the interest rate is lower than just holding onto a credit card, but I presume it is easier to access than trying to go through the financial aid office at school and get a COA adjustment...

It shouldn't be necessary, however you are very right in that you must make sure that you can budget yourself accordingly with the consideration that you will use 2.5k of your living budget to pay down your debt.
In the end it's still better to pay down your debt now, try to save as much money as you can, and if you do expect to go over budget, get a new credit card that have an introductory 0%APR cards, and pay that down immediately after you get your next disbursement.

 

[pDeluxe]

It shouldn't be necessary, however you are very right in that you must make sure that you can budget yourself accordingly with the consideration that you will use 2.5k of your living budget to pay down your debt.
In the end it's still better to pay down your debt now, try to save as much money as you can, and if you do expect to go over budget, get a new credit card that have an introductory 0%APR cards, and pay that down immediately after you get your next disbursement.

Hmm... But doesn't the amount of debt you currently have impact your eligibility for those 0% APR cards? I tried googling, but most articles are talking about student loans impacting credit when someone is already in repayment period. It seems to me that it'd be better to get the personal line of credit established while I still have low debt, rather than wait and try applying for a credit card only to find that my medical school debt makes ineligible for a 0% introductory card or even a reasonable rate. Sorry if this doesn't make sense, I'm trying to learn about my options as I go.

Thanks for the reply by the way!

 

[darkjedi]

Hmm... But doesn't the amount of debt you currently have impact your eligibility for those 0% APR cards? I tried googling, but most articles are talking about student loans impacting credit when someone is already in repayment period. It seems to me that it'd be better to get the personal line of credit established while I still have low debt, rather than wait and try applying for a credit card only to find that my medical school debt makes ineligible for a 0% introductory card or even a reasonable rate. Sorry if this doesn't make sense, I'm trying to learn about my options as I go.

Thanks for the reply by the way!

Student loans and their amounts aren't considered as part of your credit score, unless you've missed payments. Paying them back on time can in fact help your credit score as well. Personal lines of credits are usually not that cheap anyway. Do you know if you have a good credit history?

 

[pDeluxe]

Student loans and their amounts aren't considered as part of your credit score, unless you've missed payments. Paying them back on time can in fact help your credit score as well. Personal lines of credits are usually not that cheap anyway. Do you know if you have a good credit history?

Oh, that's good to know!

Yeah, my credit score is "good" but not "excellent". >700

 

[m1021]

Hmm... But doesn't the amount of debt you currently have impact your eligibility for those 0% APR cards? I tried googling, but most articles are talking about student loans impacting credit when someone is already in repayment period. It seems to me that it'd be better to get the personal line of credit established while I still have low debt, rather than wait and try applying for a credit card only to find that my medical school debt makes ineligible for a 0% introductory card or even a reasonable rate. Sorry if this doesn't make sense, I'm trying to learn about my options as I go.

Thanks for the reply by the way!

Hey, this is exactly what I just did last week! I got a new credit card (Chase Freedom) with 15 months 0%APR. I figured this is my last chance to get a new card since i'm starting school in less than two months. Now, I'll pay off my current credit card with loans, and if I run out of money at the end of the semester, I'll charge it to new card with 0% APR. I figured at least after a year, i"ll catch up and have practically no credit card debt.

 

[mysdnhandle]

Like most non trads, I had to live independently for a couple of years with a low paying biology related job. I ended up racking up about 10k in credit card debt from paying travel costs for interviews and applications, etc. I will start med school next year and was wondering if its smart to pay off my cards with my med school loans. Any other suggestion to how I can fix my situation?

You should use the money you are being loaned to pay down high interest debt to save money. Unless there is a rule specifically against it in your loan. Then you should use credit cards for cash back only, not as high-interest loans.

I don't know the answer to your particular situation but it seems like you used the cards for education-related expenses, so you might be able to get by if there are any rules in your student loan. This might be a grey area which may or may not be enforced. You should talk to whoever you are getting the loan from. My advice is..do it, and save your money. Student loan rates are high but credit card rates are downright predatory. It's your money. My opinion is that It is unlikely someone is going to go after you for paying education-related costs....with a student loan.

 

[mysdnhandle]

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