student loan advice | Can I use my student loan to pay off my credit card debt?

Can I use my student loan to pay off my credit card debt?

Can I use my student loan to pay off my credit card debt?


Monica W asks: I have $3500 in credit card debt. My Mom and Dad are paying for my school, but I have been unable to live on the money I get from them for living expenses. I wish that I had took out another student loan instead of using the credit card.

Already this semester I’ve taken out a SallieMae Signatue Student Loan with my dad as a cosigner. He is going to pay the balance for me.

The signature student loan went directly toward college tuition. Can I take out another student loan to pay off my credit card?

I’m embarassed about this whole thing and don’t want my Mom and Dad to find out. The problem is that I might need my Dad to cosign for a student loan, but in this case I would seriously rather pay the extra interest than have him find out about my credit card debt. Can I take out another student loan from a different lender in the same semester?

Student Loan Guru: Well Monica, I hate to say it but you should be embarassed. Now it’s true I don’t know your living situation, you didn’t tell me that in your email. But when my two kids were in college, I saw this happen quite a bit. Let’s take a look at several things. I’m also going to assume a few things as well, and I’m betting that I’m right.

First. $3500 isn’t a great deal of money, even for a college student. Get a job! Work nights, weekends, whenever. There are part time opportunities on nearly every campus. And while you’re at it, cut those so called “living” expenses. If you’re stopping by Starbucks every day, stop it. Going out to eat or “hanging out with the girls”, stop it! You could have that $3500 in credit card debt paid off within a few months just by getting a part time job, cutting your livng expenses and saving up all the cash you can.

If on the other hand, you still want to do something really stupid and take out yet another loan to pay a loan (and that is what a credit card bill really is) then you may run into problems.

Student loans are designed for legitimate education expenses, not paying credit cards because we made bad decisions. The money from student loans is suppose to pay for books, computers, housing, and in some cases transportation. But if your credit card has things like trips to the movies, clothing, or the miscellaneous things that end up on credit cards, then no, you can’t use a student loan to pay for those. Using that money for anything else might be considered student loan fraud by some authorities.

Student loans that are backed by the Federal government usually get paid to the college you are attending. Any extra money will then be given back to you by the college. So the school’s going to use it for tuition and housing and anything else they can think to charge you for, and give you what’s left, in most cases.

Whether you can take out a second loan when you’ve already gotten one for the semester, depends on what type of loan you’re looking for and the amount of that student loan.

But the smart thing to do would be to get a job on campus or in the local community and stop charging on the card. Save up the money and pay it off. Tear the card up and never use it again. You’ve shown by your actions that you’re not at a place in your life where you can handle a credit card responsibily, much like many other students, so you should not have access to one. At the very minimum, and this isn’t a wise move either, you can start paying more than the minimum each month until you get it paid off. But, apparently you haven’t done that either.

If the money your parents are giving you isn’t enough to live on, then why didn’t you just tell them? I have a sneaky suspicion that it was enough to live on, but NOT enough to maintain a lifestyle like MONICA wanted! Now you’re in a pickle and you need Momma and Daddy’s help again. Suck it up Sister. Maybe they can pay it off for you. Maybe they can help get you a job for the summer. Or maybe they’ll have other ideas to help you out of your situation. Sounds like they’ve done quite a bit already so a little more won’t hurt.

Not to mention all the legal trouble you’ll prevent, a bad credit score that will stay with you a decade or more, and insane interest payments that you’ll rack up, putting you further behind.

Face it, you’ve made bad financial decisions in your life up to this point. You’re at a turning point now. You realize it and are trying to fix it. Don’t make another bad financial decision by taking out a private student loan to pay off credit card debt. They don’t have the same protections as federal student loans do, and you’re bound by law to pay those off also.

Another suggestion to help you pay it off is to sell some of those things you no longer need now that you’re at school. I’m betting you have “stuff” laying around you could sell for some quick cash. A bunch of DVDs, video games, computers, etc. They’re gone. Sacrificed to get this debt paid off. And don’t forget to sell those textbooks somewhere when you’re done with them. They lose value with over time, so don’t sit on them very long. You could also do odd job around campus like write for other students, clean dorms and rent houses, etc. And don’t tell my you don’t have time due to your studies. If you really want this credit card debt gone, you’ll find time for both.

So what are you going to do now? Keep going down the same path you’re on or veer off and straighten up? I really doubt you need another student loan to pay off your credit card, you need a financial make over. I highly recommend Dave Ramsey’s book. He has several and I bet your library has a copy.

Can I use my student loan to pay off my credit card debt?

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