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Using surplus Grad Plus loans to pay off/down car?


DaniCM
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So, weird question, but I didn't know where to put it...

 

I was offered half tuition scholarship and some federal work study money from Fletcher, in addition to the standard $20,500 unsubsidized direct loan per year. Taken together, my scholarship, unsubsidized direct loan and federal work study money will cover my first year tutition, but I'll still need to work part time as well as take out a Grad Plus loan to cover living expenses while in school.

 

I also have a $200/month payment on a car I bought last year for $8K. As a full time grad student, I'll have to use a combination of my Grad Plus loan money and my part time wages to pay my car payment while in school.

 

so my question is, since I'll be using (at least some) loan money to make my car payment each month anyway, does it make sense to just take out a larger Grad Plus loan than I otherwise woul in order to pay off my car? The interest rate on the Grad Plus loan (7.9%) is cheaper than my car loan (almost 12%), plus payments would be deferred until after I graduate, should I need that cushion.

 

I do realize interest on Grad Plus loans still accumulates while you're in school. I'm hoping to make payments on the Grad Plus loan when/if I have the extra money during both the academic year and the summer (when I can work full time and make more money).

Thoughts?

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