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Shifting some debt over

September 16th, 2008 at 09:01 am

Yesterday we got a check for $3,293.72 from the university NT's attending. We received too much financial aid and I thought they'd send the excess straight back to the loan company, but instead they sent it to us.

I was going to just deposit it and write a check to the loan company, but then it struck me: Why use the money to pay off a 5.7% interest loan when I've got that 8.9% personal loan sitting there with over $22,000 left to pay?

So I'm going to use the check to pay off $3,293.72 of my personal loan instead. I'm not sure how much money it will save us over time, but it certainly won't hurt matters any. So effectively, I haven't lowered my debt at all, but my CC/personal debt will be less and student loan debt will be more. Kind of like a little balance transfer to a lower-interest loan, but without the balance transfer fee.

7 Responses to “Shifting some debt over”

  1. Petunia Says:

    I hope this strategy works out well for you.

  2. merch Says:

    I think the most important thing is that the money is going to debt. Where it goes, I think is less important. Your talking about 3.2% difference on $3,293.72 or $105.40 a year.

    Just my 2 cents.

  3. ceejay74 Says:

    Thanks Petunia. Merch, I think you're right; I think it was mostly a pyschological thing for me, wanting to put the money toward a higher-interest debt versus just giving it back. The sooner I pay off my 8.9%, the sooner I pay my dad back, because that's my No. 2 priority. So the thought of being able to do that a month or two early, then tackling the extra student loan debt after, appealed to me.

  4. scfr Says:

    ceejay74 - Excuse my total ignorance about student loans, but are you allowed to keep any over-payment without incurring a penalty?

  5. ceejay74 Says:

    I think so, scfr--many people pay for living expenses, technology, etc., with their student loans. Some people just blow the money, and I don't think there's any oversight as to how you use it.

  6. sillyoleme Says:

    Yea, I agree... I don't think there is much oversight on how people spend their student loans, as long as they are enrolled in classes. BF used his for tuition and worked to pay everything else, but I have a friend who uses it for tuition, rent, and rodeo expenses (she college rodeos).

  7. Personal Finance Student Says:

    I always kept any overages to pay for books and a little CC debt I'd incurred (if any) the previous semester. I worked to cover living expenses, but it was SUPER tight. Congrats and good luck with everything.

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