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People should not use student loans for credit card debts, though debt consolidation may be an option
By Sam Craine on Mar 4th, 2010
Many people in college may find that when they graduate, they owe some money on their credit cards.
A recent survey from Sallie Mae shows that the average credit card debt for a graduating senior was $4,100 in 2008. That's up from the $2,900 average reported four years earlier.
In the face of credit card debt, some young people may examine a number of options to try to pay it off, including tapping into student loans. Such was the case of one letter writer to Bankrate.com's Steve Bucci. In the letter, the young man said he was thinking of getting student loan to pay off his credit card debt.
The advantage, the student thought, was that the student loan's payments were at 7 percent and could be deferred, whereas the credit card's 6.5 percent interest was piling up.
"My experience is that because of the bulletproof nature of these loans, there are fewer options to take, should you ever default on a student loan, making them doubly dangerous," Bucci wrote.
As a result, Bucci said the letter writer should not take out a student loan to pay off credit card debt. Rather, they should try and up the amount they pay on their credit cards while also avoiding additional charges.
Of course, there may be other options for consumers. For example, some may consider tapping into debt consolidation, which can help pay of credit card debts at a lower interest rate.
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