Quick loan question

Discuss various money matters here. Loans (federal and private), scholarships, lottery winnings, or other school finance related information and queries.
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kalvano
Posts: 11719
Joined: Mon Sep 07, 2009 2:24 am

Quick loan question

Postby kalvano » Tue Mar 23, 2010 12:30 am

I've got some debt that I would love to pare down during school.

I don't need the full amount for cost of living that comes with a Grad Plus loan...can I use the extra to pay off that debt? The interest rate is much better.

Are there any restrictions on what you can do with the money?

starsong
Posts: 421
Joined: Sun Aug 09, 2009 2:35 pm

Re: Quick loan question

Postby starsong » Tue Mar 23, 2010 12:41 am

kalvano wrote:I've got some debt that I would love to pare down during school.

I don't need the full amount for cost of living that comes with a Grad Plus loan...can I use the extra to pay off that debt? The interest rate is much better.

Are there any restrictions on what you can do with the money?


Of course...nobody cares what you do with the money...

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bees
Posts: 310
Joined: Tue Oct 20, 2009 11:50 pm

Re: Quick loan question

Postby bees » Tue Mar 23, 2010 12:55 am

starsong wrote:
kalvano wrote:I've got some debt that I would love to pare down during school.

I don't need the full amount for cost of living that comes with a Grad Plus loan...can I use the extra to pay off that debt? The interest rate is much better.

Are there any restrictions on what you can do with the money?


Of course...nobody cares what you do with the money...


When you sign your MPN you agree to use it only for certain things (tuition and living expenses associated with attending school). Does paying off other loans fall into one of those categories? My gut says no, though I could be wrong.

starsong
Posts: 421
Joined: Sun Aug 09, 2009 2:35 pm

Re: Quick loan question

Postby starsong » Tue Mar 23, 2010 1:06 am

bees wrote:
starsong wrote:
kalvano wrote:I've got some debt that I would love to pare down during school.

I don't need the full amount for cost of living that comes with a Grad Plus loan...can I use the extra to pay off that debt? The interest rate is much better.

Are there any restrictions on what you can do with the money?


Of course...nobody cares what you do with the money...


When you sign your MPN you agree to use it only for certain things (tuition and living expenses associated with attending school). Does paying off other loans fall into one of those categories? My gut says no, though I could be wrong.


I'm no lawyer, but "living expenses associated with attending school" seems like a very, very broad definition. A typical COA budget includes "Personal", "Miscellaneous", and sometimes "Travel" expenses. If those are "associated with attending school".....

Seems to me like the point of that limitation is to prevent people abusing the education loan system, i.e. taking gradplus loans to buy cars, etc. Paying down debt can actually be a very legitimate education-related expense: by converting prior debt to gradplus loans, you're enabling yourself to take on a lower-paying job via IBR. That seems totally kosher to me, since you were entitled to the money anyway (i.e. I was entitled to a gradplus loan of $50,000/year, but I lived frugally so I could pay down credit card debt with some of that money, meaning I can now take a public interest job b/c all my debt is repaid via IBR). That seems very related to a legal education. Besides, what else is someone with prior debt (when LS starts) supposed to do? Live the high life and exploit the full COA? Or live frugally with the de facto discrimination of less funds than his/her classmates? That seems unfair, and either way, it leaves the individual crippled by the repayments in a manner that arguably contradicts the purpose of a legal education.

If you're concerned about it, though, get legal advice.

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kn6542
Posts: 833
Joined: Sun Aug 05, 2007 5:12 pm

Re: Quick loan question

Postby kn6542 » Tue Mar 23, 2010 1:57 am

bees wrote:
starsong wrote:
kalvano wrote:I've got some debt that I would love to pare down during school.

I don't need the full amount for cost of living that comes with a Grad Plus loan...can I use the extra to pay off that debt? The interest rate is much better.

Are there any restrictions on what you can do with the money?


Of course...nobody cares what you do with the money...


When you sign your MPN you agree to use it only for certain things (tuition and living expenses associated with attending school). Does paying off other loans fall into one of those categories? My gut says no, though I could be wrong.

Nobody will even know unless she fucks it up and ends up needing to take out more loans.




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