What are my best options if I want to consolidate my student loans and CC debt?

[theNEOone]

I have two student loans, one federal and one private. Each was comprised of several small loans I took out when I was in college, but consolidated once I graduated.

Federal: $23,539.45 @ 3.125%
Private: $40,778.00 @ 7.98%


I have two credit cards that I want to consolidate together with the private loan above:

CC #1: $7,232.25 @ 22.2%
CC #2: $4,526.89 @ 7.99%

The first CC fell into a more unfavorable interest rate bracket because of late payments. I have all my other payments auto-debited and have ZERO late payments on everything except for this card, because the issuer does not have automatic payments, and I always forget...boohoo. I have a 730+ credit score.

One thing that might complicate things is that as of Friday, I do not have a job. I was making a decent salary, and have some savings to get me throgh a few months if necessary, but I am now unemployed. I do have a great education and excellent work experience, so I don't expect to be out of a job for more than a week or two. Although I would prefer to do the consolidation now, I certainly don't mind waiting two weeks if necessary. I might as well start doing research now, however.

What are the best options available for consolidating my student loans and CC debt?


=|

 

[kalrith]

The only options I can think of for credit-card consolidation is either using a home-equity loan or a balance transfer to another card. You can also use credit-card counselors or debt management or whatever they want to call themselves, but I wouldn't recommend it unless you can't make the minimum payments.

As far as I know, you can't reconsolidate student loans like you can refinance a mortgage. You have to have at least one outstanding unconsolidated student loan to consolidate it again. If you use actual student-loan consolidation, then I don't think you can consolidate any non-student loans (ie credit cards) with them.

I'm wondering what benefit you think you'll get from consolidating your 3.125% interest loan.

 

[theNEOone]

Well, I would definitely leave the federal loan alone. I would only consolidate the CC debt along with the private loan. I should mention that I'm doing this partially for the psychological factor. I would like to start with a clean slate. I've been paying for all my recent purchases in full, but it's been difficult paying the large outstanding balance that I exited college with.

 

[shocksyde]

As suggested, I would leave the federal loan alone. You'll be damn lucky to find a lower interest rate than that. Best you could do is BT to a CC with a 0% promo rate for 12-18 months, then do it again when that offer expires.

 

[sjwaste]

With that credit score, you should be able to get some 0% cards to transfer the high interest CC Debt to, but you'll need a job first so you can report actual HHI. The student loans should probably be left alone.

You need strategy more than consolidation. Do you have a budget? If not, make one. See what you need to live, then put the rest of what you make towards the CC debt first (minimums on the student loans if they're in repayment). Pay off the CC's then start paying the 8% private loan aggressively. The 3% one costs less than the yield on a high interest savings, so I'd pay the minimum until the interest costs you more than what you can make in a liquid account.

In general, pay off higher interest balances first, and as aggressively as possible.

Why are you unemployed now? Voluntary or did the company fold/you get laid off? What is your field of education? I'm just throwing these out because maybe there are some types here that can help with that strategy too.

Good luck. Above all, maintain discipline until the CC's are paid off. Gotta sacrifice, but avoid everything from a new car to eating out/nights at the bar until the credit cards are gone.

 

[Tiamat]

Probably not an option for you, but are you considering grad school?

If so, you open yourself up to tons of Federal loans. A couple of my buddies were in situation like you just out of undergrad. I talked them into coming to grad school with me and now their loans are on deferment. They took the 20k$ federal unsub and sub loans (you have to do FAFSA) available to them as grad students and killed off their CC Debt and some of their private loans in one fell swoop. Next year, they will get another 20k$ and kill off more of their private loans. In then end they will have no CC Debt, and all federal loans at decent interest rates.

Just a thought...

 

[dullard]

I don't think many (any?) places will loan you money when you are $75k in debt, have a late payment history, and have no job.

You can possibly defer the federal student loan due to your job loss. Look into that. Doing this will allow your money to go to the higher interest rate debt. Like said above, you don't want to touch this portion of your debt - that is a good interest rate.

Call your CC #1 and ask if you can get a lower rate. They may be difficult, but you can probably get them to drop it back down to where it was. This could be a tricky argument, but maybe you could consider the job loss card. That is: "lower my rate, otherwise with my job loss, I can't pay any of the debt to you". You might be able to scare them into a lower APR or, it could backfire.

Could you get CC #2 to take on some of the CC #1 debt? If you could transfer the balance, you'd save $85/month.

But, your primary focus should be on getting a job. Combined, the interest on all that debt is less than $500/month. But a good job could easilly be $5000/month (depending on your field of course). Don't focus on the low number while forgetting the bigger one. Then, with a job, you possibly could get a loan or a 0% interest rate CC. However, with your massive debt history, I hope either of these doesn't turn into another reason to spend.