Using federal subsidized loans to pay off other debt

[pandoravex]

I am considering taking out a subsidized Federal loan that was offered to me for the next year of graduate school to pay off a portion of my undergraduate debt which I accrued through a private college lending program. I am hoping this would save me some money on interest in the long run. Since beginning the PhD program, I've been applying for FAFSA every year, but never use the loans offered. Instead, I keep myself on a tight budget, living of TA wages and grants. I was also able to pay some of this undergraduate debt off during graduate school. But the mushrooming interest is starting to really annoy me. This is why I'm considering using a subsidized loan to pay for my unsubsidized debt.

Does anyone know if this is an acceptable use of Federal loans?

[bon to the jour]

I'm pretty sure you aren't allowed to pay off debt with your stafford loans, but then again, how often do they really check up on that stuff? I know someone who took out stafford loans to vacation in Greece... also not allowed, i think, but no consequences yet.

[rooster34]

So you are using your stipend to pay rent and for food? Or is it the case that your stipend is paying off the loan balance and your loans are paying your room and board?

[pandoravex]

So you are using your stipend to pay rent and for food? Or is it the case that your stipend is paying off the loan balance and your loans are paying your room and board?

Please read more carefully. I'm talking about my undergraduate debt. I did not loan anything during my graduate studies. I live off stipends, TA salaries and grants, and use some of that money to make payments towards the private loan.

[rooster34]

I got what you were trying to say, it was you who missed what I was saying. As such, let me spell it out for you. If you take out a loan during grad. school the gov't has no way of knowing whether or not you are paying your room and board with that particular money or with your stipend. That is, if all the $ ends up in one acc't and then you write checks from it...