Can you use student loans to pay off credit cards

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6 strategies I used to pay off $81,000 in student loans

can you use student loans to pay off credit cards

Opening Up About My Student Loans and Credit Card Debt

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Many student loans cannot be used to pay off credit card debt. The majority of public loans, such as those offered by the US Department of Education, are tuition-only loans. Some private loans are tuition-only as well. This means you will have to seek student loans that can be used for living expenses if you intend to pay off credit card debt through the student financing. The US Department of Education offers a number of low-interest, comprehensive financing options for students. However, all of these options are direct tuition loans or guaranteed tuition loans, meaning they cannot be allocated toward living expenses.

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It is difficult to earn an income while studying for a college or graduate degree. Meanwhile, the high spending causes debt to pile up quickly.
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As such, you may be tempted to end your stint on the credit card minimum payment hamster wheel by paying off your consumer debt with excess student loans. But before you do, read on for the potential issues with this plan. Student loans are meant to pay for your tuition and fees, as well as the other expenses of attending college. That means if you stay unemployed or underemployed for an extended amount of time after graduation, your options for reducing your debt will be limited. The government offers various repayment options for borrowers who are struggling to keep up with payments, so make sure you are on the plan that best suits your budget. Mathematically, it makes sense to move debt from high-interest financing to low-interest financing. And the Nerds love math!

Is Using Student Loans to Pay Off Credit Cards a Good Idea?

Using Student Loans to Pay Off Debt While in School

Generally speaking, using student loans to pay off credit cards is a bad idea. You are paying off debt with another form of debt and this vicious cycle can negatively affect your credit score. In fact, depending on your student loan contract, you may not even be permitted to make this type of payment. There are only a few rare cases when this is a good plan, and even then it is not without drawbacks. The main reason a person should consider this option is to pay off high interest debt with low interest debt. Typically, credit cards will have higher interest rates than student loans.

How to Use Student Loans to Pay Off Credit Card Debt

Between graduating with my BA in and getting my Master's, I treated my student loan payment like a bill and just paid the minimum. After that, I knew I had to ditch my high-interest debt first. I used the debt avalanche method where I paid the minimum on all my loans, while throwing extra cash at my highest interest debt — the 7. I continued to do this, until that was paid off, and then threw extra cash at the 6. The avalanche method will help you save money on interest over time, which can mean putting more toward your principal balance. One thing I didn't realize about student loan debt is that the interest accrues daily.

It is common for students to struggle with students loans and I don't mean necessarily getting them. There is even more of a hassle to figure out how to properly spend the money you are allotted with a student loan. Many students ask the question if it is possible to use your student loans to pay off your credit card debt. This is definitely a possibility and will make sense in some cases, but at the same time be careful and remember why you got the student loans in the first place and what they mean to you and your future. You will have to pay back that money one way or the other and when you use it for credit cards make sure that you are therefore using your credit cards wisely with your purchases. Often times you want to make sure that you consolidate your credit cards to one card with the lowest rates and then pay off the credit card with the student loan.

5 thoughts on “Can you use student loans to pay off credit cards

  1. The biggest regret most student loan borrowers have is using their student loans for fun stuff like spring break or for what seemed like unnecessary expenses.

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