Refinance Auto Loan to Pay Off Student Loan?

[SoCal Spartan]

Hey everyone,

So I called my credit union today to ask about lowering my interest rate on my auto loan. They said to do so, they would have to add $2500 to the loan when refinancing, but would send me a check or deposit the money into my savings account at which point I could do what I want with -- like pay off the exact same amount added to the auto loan... doesn't make any sense to me, but it is what it is I suppose.

Anyway, this got me thinking. I have about $50k in student loans. Some of them are at a lower interest rate than what my refinanced auto loan rate would be, but others are higher. Like double or more higher.

When I asked, they said they could refinance up to the vehicle's current value. I owe about $8500 and they said they could refinance up to $18500. So I would essentially get $10000 that I could turn around and pay off some of my higher interest rate student loan debt with. I realize debt it debt, but if I have the option of lower interest debt, should't I take it?

Am I missing something here? Is this a bad idea?

[Cinder]

Two parts..
1)  Debt shuffle... lower interest rate means less 'cost' while you burn down the debt... win?

2) Using secured debt (Auto) to pay off unbankruptable debt (Student loans). 

As long as you are not doing this to prolong your debt emergency, it doesn't seem like anything is really terrible about the plan.  And if you would somehow fall into a point where you would need to bankrupt to fix your issues (which it doesn't seem like you would have to) you would just lose the car in the process. 

[rubybeth]

...I personally disagree. The government is much more reasonable than Joe Blow Bank when you get into a tough time (i.e. income based repayments, extended repayment periods, and financial hardship forebearances). Now if you do get behind you can't get out of it and they'll take your tax refund but since I'm a fan of paying what you owe that doesn't bother me.

I'm with Maigahane on this one... being able to call up and get forbearance for a few months is really helpful, and income based repayment plans can save your butt if you end up jobless. Also, I always think of the #1 reason for bankruptcy: medical bills. What would happen if you broke your leg, couldn't work for 2 or 3 months, plus had the thousands of dollars in medical bills for surgery or whatever?