[Brandon]

Looking for some advise, my wife and I both graduated with bachelor degrees around 15 years ago.

We have been diligently paying these loans down ever since.

Like with many things we have become complacent around these loans and have just been paying via auto-pay.

Recently we have decided to take charge of our finances and work to get out of debt.

We currently own a home with a considerable amount of equity.

Both cars are paid off and we have a small amount of credit card dept (<$8k).

I have $16k left on my loans and she has around $40k.

Some of the loan interest rates have gotten as high as 10%. Our finances are fully integrated as a family.

Looking for suggestions around consolidating this student loan debt and if we should consider utilizing some of the equity in my home to do so.

Our current credit union offers HELOC loans as low as 6.9% right now but the rate is variable…

Any advise or suggestions would be appreciated.

[Linda]

First priority is to pay off that high interest credit card. Then aggressively attack the student loans.

I would definitely not take an unsecured student loan and change it to a secure loan backed by your home.

You never know what can happen and I would not put my home at risk.

Just cut out other areas in your budget to allow yourself to be able to concentrate on and pay down those loans quicker.

You got this and congrats on recognizing the issue and making a decision and plan to pursue the debt free life.

[Christopher]

The credit card debt is probably the highest rate of the lot, that’d be my primary focus.

I wouldn’t post my home as collateral for a student loan, which is what using the heloc would effectively do I think.

Consolidation can be complex for a variety of reasons, mainly if your quality (or may qualify in the future) for PSLF or other forgiveness programs.

[Jule]

I would not advise to use your home as a collateral to pay off your debt.

Create a budget and strap down to attack your credit cards first, given their rates, then the student loans.

[JoNell]

If one should pass are the loans discharged? That might be a reason not to.

And not to use equity.

I know many are not Dave Ramsey fans but for the debt elimination part his program saved me

[Rosemary]

My professor said never pay more than minimum as they cancel at 25 years with continuous on time payments, even with interest.

I’m at 15 years too- 10 more
I guess pay the 2 private off.

[Erin]

You might need to do research for what is allowed for taking out HELOC. We are looking into taking one out to remodel our house and we’ve been told in the past, that’s all they allow you take the money out for, improvements on your house.

[Rick]

How many months do you project to be consumer debt free? No need to jump through a lot of hoops if this is a relatively short timeframe, and to me 2-3 years is short when paying down a lot of principle each month.

[Cierra]

Do not use secured debt (debt secured by your house) to pay off unsecured debt (credit card/student loans).

Because if something goes wrong you could lose the house.

Do some math and figure out how to pay it off over time.

[Mark]

Taking out debt to pay debt. Robbing peter to pay paul. Works exactly 0% of the time

[Tony]

I would guess that after 15 years of student loan payments, most of the debt you’re paying is principal.

I would just keep paying it, but aggressively.

For your credit card debt I would look for credit card balance transfer promotions and knock that debt down at =/- 0% APR before the promotional period is over – usually 12 or 16 months.

I think that HELOCs are helpful to have as a backup source of funding, but I wouldn’t open one to pay off debt that is only moderately higher.

You also want to look at the origination fees and any other terms associated with the HELOC before you jump in.

6.9% is decent but many HELOCs have strings attached.

[April]

Are you able to deduct all the student loan interest on your taxes? Which loans have the highest interest rate?

The private loans?
I would pay off the credit card debt first.

Then I would probably pay off the private loans first unless they had the lowest interest rates.

The highest interest loans would also be high priority.

Then focus on the other student loans and get the balance down to where you can deduct ALL the student loan interest on your taxes (a huge benefit).

At that point, I would pay off any other higher interest loans that are not your mortgage, then beef up your emergency fund/house sinking fund, and then look at the mortgage or retirement account contributions.

I would not use a HELOC unless you have no other choice or the credit card interest rate is crazy high.

[Roberta]

Could you apply for a 0% interest rate card, transfer what you can to that for your high card 1st.

If more available, transfer some of the loan.

Then pay off, rinse & repeat until debt free?

Wouldn’t sleep well, taking equity out of the home for debt.

The ATM approach on homes, was a huge contributor to how people lost their homes in 2008.

[Julie]

Only consolidate if they’re private loans. And don’t consolidate a federal with a private either.

[Sarah]

When I paid off my student loans there was no incentive to pay early than to not have a payment.

Interest was charged for the entire loan regardless of when it was paid.

If rates are low, I’d keep them and use the $ elsewhere.

[Karolina]

I would do it just for a fact that you can never get our of college debt via bankruptcy etc…

so, switching to lower intrest secured lo e def makes sense if you go gazelle on it.

[Jacob]

First, pay off the credit card debt.
I would not take a loan on your house to pay off unsecured student loans, just buckle down and pay them off aggressively.

You can also look into consolidating them for a lower rate.

We used sofi many years ago and was happy with them.

[Author]

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