Is it smart to increase my student loan to pay off my credit cards? Also penalty 4...

[crewxp]

I have a question. I'm approaching my school's deadline for paying my tuition, and I can't pay for it by myself. It's about 6K a semester, and I'm requesting about 10K in student loans to help me. I'm about to get a Wellsfargo Education Connection loan found here:

wfefs.wellsfargo.com/jump/rates.html


Questions:
1.) I was thinking, is it smart to increase my loan amount by 2K to pay off my credit cards with my extra loan amount (chase student cc 27.24% APR I think, wellsfargo student cc at 12.35% APR), so I don't have to worry about them any more? Or is there something I'm missing here?

2.) If I OVER-ESTIMATE my loan amount (Say I have 2K extra than I thought I would need), can't I just pay back the extra 2K, and still have the same rates as I would have if I had gotten a 10K loan instead of a 12K? Or would they penalize me? Since I don't know EXACTLY how much I need, it just seems smart to be safe. Or is it not smart to do that?

3.) Can I start paying back my loans immedietely? Like I do with credit cards, paying a little back while I'm in school? Any downside to this? Will this decrease the amount of time I have to pay it back?

Thanks. Applying for the loan tonight if I get enough info. Last day to apply is tomorrow. Looking forward to the advice!

[AsiaTraveler]

First question: Have you actually addressed the reason why you are in credit card debt first? If you take out more in student loans to pay it off but then turn around and rack it back up...then it's definitely a bad move b/c you'll wind up with more in total debt.

However, if you have addressed that, then it might be a good move. Things to consider though:
*When do you have to start paying on this student loan? Some loans defer while you're in school, others don't. How much will the extra $2k increase your payment?
*How does that increase in payment compare to what you're paying the credit cards each month? While racking up more interest isn't a great idea, if the out-of-pocket expenses each month with the loan are going to put you over the edge for making ends meet, you may be better off sticking with paying the credit cards for a while or looking at other options.

Plus, that interest rate seems pretty high for a student loan!

[Downfall]

The only advantage of your current debt structure is that unsecured debt (such as cc debt) gets wiped out as a matter of course in bankruptcy. While it's possible to eliminate student loan debt in bankruptcy, it's exceptionally rare and you should treat it as non-dischargeable. Just a thought there; you'd be worse off if you end up looking to the courts for a fresh start. And I've never heard of a student loan you couldn't start paying back early (effectively, paying them back with their own money).

[Fern]

I'm guessing the rate is so high becus he has a private student loan. This is the kind of thing Obama wanted to avoid by eliminating the private student loan industry and having the govt make loans to students directly.

Downfall is right, while you can negotiate credit card debt or eliminate it thru bankruptcy, student loans live forever until paid back.