“Is taking out a student loan and using it to pay off most debts or at least ‘control’ the debts a wise idea in the long run?” – D
First, a technicality: You can’t actually use a student loan for this purpose. Student loans are usually awarded with the stipulation that you use them for school-related expenses only. But, what you can do (and what I assume you’re asking) is get a student loan, and take the out-of-pocket money you were going to use for tuition/books/etc., and pay off/pay down your debts with that.
To know if this is a good idea, you really need to ask yourself some questions first.
How much student debt am I willing to take on?
If it were me, I wouldn’t go this route, because I’m already staring down the barrel of $40,000 in undergraduate debt. But if this loan will still leave you with a “comfortable level” of student debt, you might be alright. The MSN Money article “How much college debt is too much?” can help you calculate how much college debt you can safely take on.
What am I using this money to pay for, exactly?
From your question, I’m guessing you’re looking to pay off credit cards, or possibly a car loan. Either way, some kind of consumer debt. Understand that there’s a difference between these kinds of debts. Namely, a student loan never goes away. Even if you file for bankruptcy. And although a student loan rate may be more favorable, it also has a long repayment term (10-30 years).
Can I stop accumulating debt?
If this is consumer debt, then you will need to stop once you get the loan. Stop carrying a balance on your credit card. Or, if it’s a car loan, then you can’t run out and trade in your car for a new one just because your loan is paid off. If you feel you can exercise the needed amount of restraint, then alright.
How’s my credit?
If you’re getting this student loan through a private institution (a bank rather than the government), and your credit history isn’t very long, you’ll likely need a co-signer on your loan. A co-signer will be on the hook if you don’t pay the loan, so whoever it is needs to know your intentions with this loan.
Alternately, if your credit is good, you have another option. Get a credit card with a 0% intro APR on balance transfers, and move your debt over there. This is really the better option, if your credit is good enough.
Does this seem like a good idea to me?
How you feel about this is actually very important. The fact that you came to me with this question means you’re having doubts. After you think this through, if you’re still doubting it, then it’s probably not a good course of action. After you’ve considered your situation, your gut instinct will help you find your conclusion.