Law School Discussion

Nine Years of Discussion
;

Author Topic: CC Debt/Student Loan Consolidation [C&F]  (Read 420 times)

jwrig11

  • Newbie
  • *
  • Posts: 3
    • View Profile
CC Debt/Student Loan Consolidation [C&F]
« on: August 10, 2011, 05:48:28 PM »
If I had approx. $700 in CC debt from undergrad (making payments, never defaulted) and used excess student loan money (Grad PLUS) to pay off the balance and close the account - would this present an issue during bar admissions (C&F)? Interest rate on a student loan is <8% compared with +20% APR on credit card. Can't work during first year of school so pretty soon I won't have the income to cover the CC payments. Concern is that bar might view this as student loan fraud and/or poor money management. Credit otherwise is prime. Thanks

FalconJimmy

  • Sr. Citizen
  • ****
  • Posts: 684
    • View Profile
    • Email
Re: CC Debt/Student Loan Consolidation [C&F]
« Reply #1 on: August 10, 2011, 05:54:07 PM »
If I had approx. $700 in CC debt from undergrad (making payments, never defaulted) and used excess student loan money (Grad PLUS) to pay off the balance and close the account - would this present an issue during bar admissions (C&F)? Interest rate on a student loan is <8% compared with +20% APR on credit card. Can't work during first year of school so pretty soon I won't have the income to cover the CC payments. Concern is that bar might view this as student loan fraud and/or poor money management. Credit otherwise is prime. Thanks

I'm not sure what you're saying, here.  Are you saying that you received student loan money, and you used it to pay off a credit card? 

Why would this be anybody's business but yours?  I don't see how this could ever be a problem.

Hamilton

  • Sr. Citizen
  • ****
  • Posts: 337
    • View Profile
Re: CC Debt/Student Loan Consolidation [C&F]
« Reply #2 on: August 10, 2011, 06:07:09 PM »
This is a non issue.  Don't go around discussing this ($700 in CC debt is not that much in the grand scheme of things), but it is a non-issue.

jwrig11

  • Newbie
  • *
  • Posts: 3
    • View Profile
Re: CC Debt/Student Loan Consolidation [C&F]
« Reply #3 on: August 10, 2011, 06:09:43 PM »
Yes, that is what I am asking. My concern stems from the requirement that all federal student loans be used for educational expenses. Don't want them to view it as robbing Peter (government) to pay Paul (bank).

FalconJimmy

  • Sr. Citizen
  • ****
  • Posts: 684
    • View Profile
    • Email
Re: CC Debt/Student Loan Consolidation [C&F]
« Reply #4 on: August 10, 2011, 06:23:31 PM »
Yes, that is what I am asking. My concern stems from the requirement that all federal student loans be used for educational expenses. Don't want them to view it as robbing Peter (government) to pay Paul (bank).

but is this the portion that's supposed to be used for living expenses?

Using it to pay down your credit card balance is no different than putting it into a savings account for later use, really.  (Except the interest benefit to you is greater.) 

You have access to that credit, again, for use sometime in the future should you need it. 

If it's the money for living expenses, I think realistically you have to figure that there's not really a lot of strings attached.  You could use the money to run the A/C in your apartment down to 50 degrees, then eat PB&J sandwiches every day if you wanted to.  I've never heard of anybody being audited on what they used their student loan money for. 

So long as you legitimately are a student and so long as you are entitled to the money, what you do with it is largely up to you.  In a philosophical sense, so long as it's used in such a manner that it allows you to sustain yourself while in law school, I can't imagine that anybody would ever quibble with you about it.

You're trying to do the right thing, but frankly, if you used the money to drive 100 miles to your Mom & Dad's house every weekend to do your laundry, nobody would care.  There's not a requirement that you use the money optimally.  Just that you use it to cover living expenses.

Is the CC debt a living expense?  The periodic payments on it clearly are, especially since you're prohibited from working during 1L and defaulting could have dire consequences for your future.  Paying off the entire balance?  Enters a shade of gray if a person is bent on taking an excessively harsh and inflexible tack, but it's a shade of gray nobody will ever check up on or care about. 

Just my two cents.  Obviously not legal advice.  However, I think you're worrying over nothing.

FalconJimmy

  • Sr. Citizen
  • ****
  • Posts: 684
    • View Profile
    • Email
Re: CC Debt/Student Loan Consolidation [C&F]
« Reply #5 on: August 10, 2011, 06:32:32 PM »
Yes, that is what I am asking. My concern stems from the requirement that all federal student loans be used for educational expenses. Don't want them to view it as robbing Peter (government) to pay Paul (bank).

I actually did some googling just in case I may have been giving you bad advice.  Honestly, this isn't anything I'd really given much thought to, before. 

This article seems to describe what you're talking about:

http://www.loan.com/student-loans/how-to-use-student-loans-to-pay-off-credit-card-debt.html

So long as you're not using loan money that's specifically intended for tuition-only, it seems to me you're good to go. 

jwrig11

  • Newbie
  • *
  • Posts: 3
    • View Profile
Re: CC Debt/Student Loan Consolidation [C&F]
« Reply #6 on: August 10, 2011, 06:37:19 PM »
Yes, it is the portion to be used for living expenses. Due to its location, my school allots a ridiculously high figure towards living expenses in its Cost of Attendence estimates. I know I won't need all of it (found a place with really cheap rent) and that the surplus would very easily cover my debt. I agree with your response's logic and just wanted to be sure this has nevet been an issue for anyone else