Credit Card-ing vs. DREADED GRAD PLUS

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RAWR
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Credit Card-ing vs. DREADED GRAD PLUS

Postby RAWR » Thu Apr 11, 2013 2:32 pm

Talked to an atty I work with yesterday, and she mentioned that she used credit cards to finance the pieces of her education that scholarships and standard loans did not cover. She was a non-traditional student (already had a family at the time she decided to attend law school) and I have a lot of respect for her. I say that to point out that I think she's a sharp cookie by and large.

Has anyone else resorted to credit card debt in lieu of a grad plus loan? If I have to take one out, it will only be my third year, and only in the amount of approximately $8000, so it's not something I'm IMMENSELY worried about. I just wondered if anyone else has had experience with this sort of thing.

XOXO RAWR

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A. Nony Mouse
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Re: Credit Card-ing vs. DREADED GRAD PLUS

Postby A. Nony Mouse » Thu Apr 11, 2013 2:35 pm

RAWR wrote:Talked to an atty I work with yesterday, and she mentioned that she used credit cards to finance the pieces of her education that scholarships and standard loans did not cover. She was a non-traditional student (already had a family at the time she decided to attend law school) and I have a lot of respect for her. I say that to point out that I think she's a sharp cookie by and large.

Has anyone else resorted to credit card debt in lieu of a grad plus loan? If I have to take one out, it will only be my third year, and only in the amount of approximately $8000, so it's not something I'm IMMENSELY worried about. I just wondered if anyone else has had experience with this sort of thing.

XOXO RAWR

You realize that most credit cards have interest rates in the double digits, right? I think my lowest interest rate is 10.something%, and the highest is about 17%. GradPLUS are 8-something%, IIRC. So credit cards will cost you much more than GradPLUS. Also, GradPLUS loans are eligible for IBR/PAYE/PSLF, and credit card debt isn't (granted, if you only have $8000 in debt that's probably not really an issue, but I thought I'd throw it out there).

I mean, maybe it's just that I have cards with crappy interest rates, and if you find a credit card with a lower interest rate, I don't see any reason not to go that route, but I'd be surprised if there were lots of lower interest rate cards out there.

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RAWR
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Re: Credit Card-ing vs. DREADED GRAD PLUS

Postby RAWR » Thu Apr 11, 2013 2:44 pm

A. Nony Mouse wrote:
RAWR wrote:Talked to an atty I work with yesterday, and she mentioned that she used credit cards to finance the pieces of her education that scholarships and standard loans did not cover. She was a non-traditional student (already had a family at the time she decided to attend law school) and I have a lot of respect for her. I say that to point out that I think she's a sharp cookie by and large.

Has anyone else resorted to credit card debt in lieu of a grad plus loan? If I have to take one out, it will only be my third year, and only in the amount of approximately $8000, so it's not something I'm IMMENSELY worried about. I just wondered if anyone else has had experience with this sort of thing.

XOXO RAWR

You realize that most credit cards have interest rates in the double digits, right? I think my lowest interest rate is 10.something%, and the highest is about 17%. GradPLUS are 8-something%, IIRC. So credit cards will cost you much more than GradPLUS. Also, GradPLUS loans are eligible for IBR/PAYE/PSLF, and credit card debt isn't (granted, if you only have $8000 in debt that's probably not really an issue, but I thought I'd throw it out there).

I mean, maybe it's just that I have cards with crappy interest rates, and if you find a credit card with a lower interest rate, I don't see any reason not to go that route, but I'd be surprised if there were lots of lower interest rate cards out there.


Yeah, it would definitely be the VERY FIRST thing to check out if you were seriously considering it. Like I said though, it wouldn't apply to me until my third year, so at this point it was just a thought :)

SFSpartan
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Re: Credit Card-ing vs. DREADED GRAD PLUS

Postby SFSpartan » Thu Apr 11, 2013 3:10 pm

RAWR wrote:Talked to an atty I work with yesterday, and she mentioned that she used credit cards to finance the pieces of her education that scholarships and standard loans did not cover. She was a non-traditional student (already had a family at the time she decided to attend law school) and I have a lot of respect for her. I say that to point out that I think she's a sharp cookie by and large.

Has anyone else resorted to credit card debt in lieu of a grad plus loan? If I have to take one out, it will only be my third year, and only in the amount of approximately $8000, so it's not something I'm IMMENSELY worried about. I just wondered if anyone else has had experience with this sort of thing.

XOXO RAWR


Look at private educational loans. They'll save you from that 7.9% interest rate. You could go with a variable rate, which saves you a TON on interest, provided you check out the amortization schedule, and are fairly certain that you'll be able to make the payments before I a high interest rate kicks in. Alternatively, you could go with a fixed rate, which will carry an interest rate closer to GRAD Plus, but will still be less.

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nsideirish
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Re: Credit Card-ing vs. DREADED GRAD PLUS

Postby nsideirish » Thu Apr 11, 2013 5:28 pm

You'll have to start making payments on those credit cards right away and continue throughout law school. How would you be able to make those payments?

sconnielaw13
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Re: Credit Card-ing vs. DREADED GRAD PLUS

Postby sconnielaw13 » Thu Apr 11, 2013 5:37 pm

There is only one benefit to using the credit card vs. grad plus... the credit card is dischargable in bankruptcy.

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romothesavior
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Re: Credit Card-ing vs. DREADED GRAD PLUS

Postby romothesavior » Thu Apr 11, 2013 5:40 pm

vlienj24 wrote:There is only one benefit to using the credit card vs. grad plus... the credit card is dischargable in bankruptcy.

Yeah this.

There's really no point in using credit cards at all. Immediate repayment, higher interest rates, and less flexibility in repayment.

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sinfiery
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Re: Credit Card-ing vs. DREADED GRAD PLUS

Postby sinfiery » Thu Apr 11, 2013 7:44 pm

CC loans go by the wayside in bankruptcy right?

Just a thought if you're a below median 3L

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RAWR
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Re: Credit Card-ing vs. DREADED GRAD PLUS

Postby RAWR » Fri Apr 12, 2013 12:02 am

sinfiery wrote:CC loans go by the wayside in bankruptcy right?

Just a thought if you're a below median 3L


Yeah, but you're done for if you declare bkrptcy. No employer will want you.

HWS08
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Re: Credit Card-ing vs. DREADED GRAD PLUS

Postby HWS08 » Sun Apr 14, 2013 10:32 am

sinfiery wrote:CC loans go by the wayside in bankruptcy right?

Just a thought if you're a below median 3L


Not necessarily. It won't be discharged if a party can prove you incurred that debt in bad faith. If someone can show a debtor ran up that debt with the intention of declaring bankruptcy to avoid paying it off (for example, by finding a thread on the internet like this one), the judge can decide not to discharge it. That's an unlikely scenario, but just something to think about.

Big Dog
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Re: Credit Card-ing vs. DREADED GRAD PLUS

Postby Big Dog » Sun Apr 14, 2013 10:56 am

Talked to an atty I work with yesterday, and she mentioned that she used credit cards to finance the pieces of her education that scholarships and standard loans did not cover. She was a non-traditional student (already had a family at the time she decided to attend law school) and I have a lot of respect for her. I say that to point out that I think she's a sharp cookie by and large.


She maybe "sharp" for the law, but she is ignorant/foolish/stupid with finances. The ONLY reason anyone would swap a high interest rate credit card for a grad plus loan is IFF the planned to declare bk later and get it discharged.

Edited to add: I guess she would earn some frequent flyer miles.... :x

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Tiago Splitter
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Re: Credit Card-ing vs. DREADED GRAD PLUS

Postby Tiago Splitter » Sun Apr 14, 2013 11:17 am

A fair number of credit cards offer low or no interest teaser rates for the first year. Those would be better than Grad Plus loans if you can have the balance on the card back at zero within twelve months.

Danteshek
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Re: Credit Card-ing vs. DREADED GRAD PLUS

Postby Danteshek » Sun Apr 14, 2013 11:29 am

Unlike grad plus, Credit cards don't charge 4% up front for the privilege of borrowing

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sinfiery
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Re: Credit Card-ing vs. DREADED GRAD PLUS

Postby sinfiery » Sun Apr 14, 2013 2:47 pm

HWS08 wrote:Not necessarily. It won't be discharged if a party can prove you incurred that debt in bad faith. If someone can show a debtor ran up that debt with the intention of declaring bankruptcy to avoid paying it off (for example, by finding a thread on the internet like this one), the judge can decide not to discharge it. That's an unlikely scenario, but just something to think about.


This is where law school lay prestiege will pay huge dividends 8)

Oh, you go to American University School of Law and just needed help paying for your tuition? I'm sure they didn't think they would end up bankrupt working as a lawyer from American!




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