Hi EA people,

I'm more of a lurker than a poster these days, but I figured that since there are lots of smart folks here I could run a scenario by you and see what you all thought.

My wife and I have A LOT of student loan debt (nearly six figures). We also own a house that has enough equity to pay off the massive student loan headache. Would you sell a house to pay off a major debt and start over with a clean slate? Or would you stick it out for a while and let the house possibly build even more equity, all the while paying the monthly amount of $600 over 30 years for your consolidated student loans? Thanks for any and all opinions.

Keep the home.

Interest rates on student loans are much, much lower than home loans.

If you sell your home, pay off your debt, then and eventually buy another home, more than likely you're paying a higher cost for a home and at a higher interest rate. Although in a shorter time period, since home loans are generally 10-20 years.

Try making 13 payments a year by paying $650 a month. This will shorten the length of the loan considerably.

Make a spreadsheet of all your options and go with what makes sense.

whoa! and i thought my $15k was rough. Leveraging it with a house!

Are you living in the house? can it be used to generate income (rent money, etc) or is it costly to maintain? student loans can't generate income.

just another point, i guess... i don't own any property and I'm just a kid... but my parents would use their property to generate income, which was the true value of it.

gio wrote:whoa! and i thought my $15k was rough.

We have private school to thank for our debt! As far as using the house as a rental, we wouldn't be able to rent it for the amount that would make it profitable, unfortunately. Anyway, I think we are going toward staying put for a while and let the house increase in value, hopefully...then sell and have enough to pay the bills and for a down payment on another place.

Matthew Taylor wrote:Keep the home.

Interest rates on student loans are much, much lower than home loans.

If you sell your home, pay off your debt, then and eventually buy another home, more than likely you're paying a higher cost for a home and at a higher interest rate. Although in a shorter time period, since home loans are generally 10-20 years.

Try making 13 payments a year by paying $650 a month. This will shorten the length of the loan considerably.

Make a spreadsheet of all your options and go with what makes sense.

Good advice, thank you Matthew.

I believe student loan interest is tax deductable but only for certain types of loans and it may be limited. Mortgage interest is fully deductable. Depending upon the rates and tax effect you may want to consolidate.

I think I would stick with the student loans and the house as is, as long as you can make ends meet. I don't know the numbers involved, so it is just general advice, but if you like the house, I would try to make it work. Otherwise, besides selling the house you could try a
home equity loan.
If you have the equity in your house now, you could take a look at paying off the loans with a home equity loan. This would have worked better a couple of years ago when the prime rate was 4%, rather than over 8%, but depending on the numbers, it may work. You would probably be looking at a max term of 15 yrs and a rate at around 8% or more, so if you have high rates on your student loans and/or have less than say 12 yrs left to pay on them, that may help your monthly payment at least. Most likely that these days, the rate on the student loans would be lower.
Stay away from interest only home equity loans. They are a scam, in my opinion.
If you have a bank or credit union that you trust, I would call them and tell them the situation and see if they have anything that could work for you.

First thing you need to do is divorce that woman, look what a financial mess she's gotten you into. It's only gonna get worse.
Second, fake your own death and start over with a clean slate.
With your new life don't waste so much money on stupid shit like college.

In the future lemmie 'splain something to you, and all of you for that matter....you can bypass the entire college thing by just SAYING you went to college, make up whatever degree you want and just put it on your resume....the types of dumb ass office monkey jobs most of you people go for will never ever check that shit out, I assure you.

Marsupialized wrote:First thing you need to do is divorce that woman, look what a financial mess she's gotten you into. It's only gonna get worse.
Second, fake your own death and start over with a clean slate.
With your new life don't waste so much money on stupid shit like college.

I did this. When my girlfriend of four years and I split up, I moved out of our place, quit my job and spent eight months living in squats and off any official register, i.e., social security or electoral. this six to eight month period is going to be when they're looking for you. I re-opened an old bank account I hadn't used for seven years, which had no overdraft, cheque or credit card facility and used that when I came back to working again. I lost a few grand debt to the first bank in overdraft and postgraduate loans and a few grand debt to the student loans company.

Marsupialized wrote:First thing you need to do is divorce that woman, look what a financial mess she's gotten you into. It's only gonna get worse.
Second, fake your own death and start over with a clean slate.
With your new life don't waste so much money on stupid shit like college.

In the future lemmie 'splain something to you, and all of you for that matter....you can bypass the entire college thing by just SAYING you went to college, make up whatever degree you want and just put it on your resume....the types of dumb ass office monkey jobs most of you people go for will never ever check that shit out, I assure you.

Hey can't you buy a degree in the states?